Chevron and Devon Energy: Two Must-Own Energy Stocks News ad

The energy sector started 2025 at an impressive pace, significantly outperforming the overall market. These impressive results are reflected in the Energy Select Sector SPDR Fund. NEW SIRKA: XLEwhich has gained 8.07% year-to-date as of Jan. 16, far outpacing the S&P 500’s modest 1.39% gain. The sector’s strength is underpinned by multiple factors, including rising oil prices, geopolitical tensions and favorable policy developments.

Energy sector results in 2025

The energy sector’s early success in 2025 is driven by a combination of market dynamics and macroeconomic factors. Geopolitical tensions and expected sanctions, especially disruptions in key oil-producing regions, sent Brent crude prices up more than 5% in the first two weeks of the year. The rally supported energy stocks, which are closely linked to oil price movements.

Additionally, demand expectations remain strong. Signals of economic recovery in major global markets and expected growth in industrial activity have fueled optimism about future energy consumption. US policy changes encouraging investment in fossil fuels and exploration have also boosted the sector, further boosting investor sentiment. These factors have positioned energy as one of the most resilient and dynamic industries entering 2025.

2 Energy Leaders Worth Buying

Strong balance sheet and dividend growth fuel Chevron’s success

Chevron Corporation New York Stock Exchange: CVXThe second-largest holding in the XLE ETF is now the top performer in 2025. Thanks to a strong balance sheet, consistent dividend growth and a diversified portfolio, Chevron has returned 9.3% year-to-date, significantly outperforming its sector and peers. The company maintains a forward P/E ratio of 14.45 and offers a dividend yield of 4.12%, making it attractive to both growth-oriented and income-oriented investors.

Analysts have a positive outlook on Chevron shares, with a Moderate Buy rating and a price target of 10.5% upside. The company’s upcoming earnings report, due on January 31, is expected to be a major catalyst and potentially impact the company’s growth trajectory for the rest of the year. Chevron’s ability to outperform the sector and balance strong financial performance and industry challenges with a stable dividend payout makes it a top choice for investors seeking exposure to the energy sector.

Analysts rate Devon Energy as a Moderate Buy with room for growth

Devon Energy New York Stock Exchange: DVNWith a market capitalization of $24.2 billion, almost ten times smaller than CVX, it is another prominent player in the early stage of the sector. The company specializes in exploration and production in the United States, operating thousands of wells in key regions such as the Delaware Basin and Eagle Ford. Its innovative dividend policy, combining fixed and variable components linked to free cash flow, offers a forward yield of 4.13%, with the potential for significant increases if oil prices remain strong.

After a long downtrend that began in April 2024, Devon Energy shares are up 17.5% year to date. This trend reversal, coupled with its low Forward P/E of 7.12, suggests strong upside potential. Analysts maintain a Moderate Buy rating, with forecasts indicating significant upside opportunities. The company’s strong growth and attractive valuation make it a potential sector leader in 2025.

Energy Sector Outlook

The strong start to 2025 in the energy sector reflects favorable conditions that could support further momentum. The XLE ETF’s performance, supported by rising oil prices and sector-specific tailwinds, suggests further gains could be on the horizon. In addition, large energy stocks such as Chevron and Devon Energy show resilience and significant growth potential, especially given their impressive dividend yields.

Energy stocks offer attractive opportunities for long-term investors, combining growth potential with reliable dividend income. While earnings reports and geopolitical events will be critical to shaping and maintaining the sector’s trajectory, current energy market dynamics and early results suggest that 2025 could be a banner year for energy-focused investments.

Before you consider Chevron, you might want to hear this.

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