Chevron and Devon Energy: Two must-own energy stocks

The Energy field has started 2025 with remarkable momentum, significantly outperforming the broader market. This is reflected in the impressive performance Energy Select Sector SPDR Fund NYSEARCA: XLEThat’s up 8.07% year-to-date through January 16, far outpacing the S&P 500’s meager 1.39% gain. The strength of the sector is underpinned by several factors, including rising oil prices, geopolitical tensions, and favorable policy developments.

Better performance of the energy sector in 2025

Initial success of energy sector in 2025 a A mix of market dynamics and macroeconomic factors. Geopolitical tensions and possible sanctions, particularly disruptions in key oil-producing regions, have boosted Brent crude prices by more than 5% in the first two weeks of the year. This rally has closely linked energy stocks to movements in oil prices.

Moreover, demand expectations remain strong. Signs of economic recovery in major global markets and anticipated growth in industrial activity have led to optimism about future energy consumption. Policy changes in the US, encouraging fossil fuel investments and exploration, have also boosted the sector, further boosting investor sentiment. These factors are linked to energy’s position as one of the most resilient and dynamic sectors entering 2025.

2 to buy Energy Outperformer

A strong balance sheet and dividend growth fuel Chevron’s success

Chevron Corporation NYSE: CVXXLE, the second-largest holding in the ETF, has emerged as a top performer in 2025 so far. With A Strong balance sheetConsistent dividend growth, and a diversified portfolio, Chevron has gained 9.3% year-to-date, strongly outperforming its sector and competitors. The company maintains a forward P/E ratio of 14.45 and offers a Dividend yield 4.12%, making it attractive to growth and income-focused investors.

the analyst Keep a positive view on Chevron, with a moderate buy rating and a price target suggesting a potential 10.5% upside. Its upcoming earnings report on January 31 is expected to be an important catalyst, likely influencing its trajectory for the rest of the year. Chevron’s ability to outperform the sector and balance strong financial performance and industry challenges with stable dividend payouts This makes it a top choice for investors Seeking exposure to energy sector.

Analysts rate Devon Energy a moderate buy with room to grow

Devon Energy NYSE: DVNWith a market capitalization of $24.2 billion, nearly ten times less than CVX, startups in the sector have another stellar performance. The company focuses on US-based exploration and production, operating thousands of wells in key fields such as the Delaware Basin and Eagle Ford. Its innovative dividend policy, combined with fixed and variable components combined with free cash flow, offers a A forward yield of 4.13%, With the potential for significant increases if oil prices remain high.

After a long downtrend that started in April 2024, Devon Energy is broke With a 17.5% year-to-date gain. This trend reversal, combined with its low forward P/E of 7.12, suggests strong upside potential. the analyst Maintain a moderate buy rating, with estimates that show plenty of room for growth. The company’s sharp rebound and attractive valuation metrics position it as a potential leader in the sector for 2025.

Outlook for the energy sector

The energy sector’s strong start to 2025 indicates favorable conditions that could support continued momentum. The performance of the XLE ETF, buoyed by rising oil prices and sector-specific tailwinds, suggests further gains may be on the horizon. Additionally, major energy stocks like Chevron and Devon Energy show resilience and significant upside potential, especially when considering their impressive dividend yields.

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

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

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