Here Are My Top 3 Energy Stocks to Buy Now | The Motley Fool

The energy sector had a rather quiet year. The average energy stock in the S&P 500 is only up about 4% year-to-date, compared to a nearly 18% rise by the broader market index. Lower oil prices contributed to the energy sector's lackluster returns. Despite the sector's recent underperformance, the energy industry remains vital to fueling the economy. Here are my top three energy stocks to buy now to capitalize on the expected continued growth in energy demand. Image source: Getty Images. ConocoPhillips ConocoPhillips ( COP 0.28%) is a leading oil and gas producer. The company has built one of the deepest and most diversified portfolios in the sector with some of the lowest operating costs. ConocoPhillips currently needs an average oil price in the mid-$40s to sustain its capital spending program and about $10 more per barrel to fund its dividend. With crude oil currently priced in the low $60s, ConocoPhillips is generating a substantial amount of surplus free cash flow. The company expects its breakeven level to steadily fall over the next several years as it captures more cost savings from last year's Marathon Oil megadeal. Additionally, the company expects to complete three large-scale liquefied natural gas projects and its Willow oil project in Alaska by the end of the decade. These catalysts will add an incremental $6 billion in annual free cash flow by 2029, assuming a $60 oil price. That's a meaningful increase for a company that produced $6.1 billion in free cash flow through the first nine months of this year. NYSE: COP Key Data Points ConocoPhillips' growing cash flow will give it more money to increase its 3.4%-yielding dividend. It recently hiked its payout by 8% and aims to deliver dividend growth within the top 10% of companies in the S&P 500 in the future. Additionally, the company plans to continue repurchasing shares . This combination of growing cash flow and cash returns could give ConocoPhillips the fuel to produce a robust total return for investors over the next few years. Oneok Oneok ( OKE 0.53%) is one of the country's largest energy midstream companies. The pipeline company generates very stable cash flow backed by long-term contracts and government-regulated rate structures. This cash flow supports the company's high-yielding dividend (5.6% current yield). NYSE: OKE Key Data Points The company has spent the past few years strategically expanding its midstream platform by making a series of acquisitions. It acquired Magellan Midstream Partners in a transformational transaction in 2023 to expand into crude oil and refined petroleum products infrastructure. It followed that up last year by purchasing Medallion Midstream and a controlling interest in EnLink for $5.9 billion, before acquiring the remaining interest in EnLink for $4.3 billion earlier this year. Oneok expects to capture hundreds of millions of dollars in cost savings and other synergies from these deals over the next few years. Additionally, the pipeline company has approved several organic expansion projects, including the construction of the Texas City Logistics Export Terminal and the Eiger...

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