The energy sector is poised to grab investor attention in 2025. Even though oil (CBK25) prices have been volatile and the economy hasn’t exactly been smooth, energy companies still manage to boost their dividend payouts. In fact, according to S&P Global, the energy sector remains one of the top-paying globally, with total dividend payouts estimated at $320 billion for 2025.
Two standout dividend-paying stocks from the energy sector are Devon Energy (DVN) and Occidental Petroleum (OXY), both of which recently raised their dividends significantly. Devon increased its quarterly dividend by an impressive 60% at the start of 2025, thanks to strong earnings and higher oil production.
Occidental Petroleum also stepped up, lifting its annual dividend 9%.
Overall, energy stocks offer an average dividend yield of around 4.24%, beating many other sectors and making them attractive to investors looking for reliable income. Let’s dive into how Devon Energy and Occidental Petroleum are setting the pace for dividend growth this year.
Dividend Stock #1: Devon Energy (DVN)
Devon Energy (DVN) is a top player in the oil and natural gas exploration and production business, based in Oklahoma City.
Devon Energy shares are down almost 25% over the past 52 weeks, although they are up just under 8% in the year to date. DVN is outperforming the S&P 500 Index ($SPX), which is down nearly 5% so far in 2025.
The stock’s forward price-earnings (P/E) ratio of 6.7x is notably lower than the sector average of 11.25x, suggesting it is undervalued relative to peers.
The dividend increase brings Devon Energy's forward dividend yield to 2.74%, and a payout ratio of just 18.5% indicates room for continued dividend growth while maintaining financial flexibility.
In its latest earnings report, Devon reported $639 million in net income, beating expectations. The company produced a record 398,000 barrels of oil daily and generated $738 million in free cash flow in the fourth quarter. Net income for the full year came in at $2.9 billion.
For income investors, a key figure is that Devon paid out $2 billion to shareholders through dividends and buybacks in 2024.
In 2025, Devon expects to boost production to 805,000–825,000 barrels of oil equivalent daily and plans to spend $3.8 billion to $4 billion on capital projects.
Analysts remain optimistic about Devon Energy's future, with a consensus “Moderate Buy” rating. The average price target for the stock is $49.23, representing potential upside of approximately 40% from its current price.
Dividend Stock #2: Occidental Petroleum (OXY)
Occidental Petroleum (OXY) is a global energy company that produces oil and gas. It also has a chemicals and midstream marketing business.
Over the past year, Occidental’s stock has dropped around 24%, primarily due to lower oil prices. So far this year, shares are down another 6.4%.
Right now, its forward P/E ratio is about 13.75x, slightly higher than the sector average of 11.25x. Recently, Occidental raised its dividend by 9% to $0.24 per share, bringing its forward yield to about 2.07%.
In Q4 2024, Occidental generated adjusted income of $792 million on revenue of $6.84 billion. The company posted record production of about 1.463 million barrels per day and generated $3.6 billion in operating cash flow.
In 2025, the company is targeting production between 1.385 million and 1.445 million barrels per day. It also announced plans to sell off around $1.2 billion in assets to keep reducing debt.
Analysts are cautiously optimistic about Occidental’s future, giving it a “Hold” rating overall. The average price target is $59.46, which suggests potential upside of about 28% from its current price.
The Bottom Line
Both Devon Energy and Occidental Petroleum have shown their commitment to rewarding shareholders by raising their dividends for 2025, backed by strong operational performance and strategic financial management. While Devon capitalizes on its diversified assets and robust cash flow, Occidental focuses on deleveraging and sustainability, setting the stage for long-term growth. For investors seeking dependable income in the energy sector, these two companies stand out as compelling picks with promising upside potential.
