2 energy dividend shares for 2025

The energy sector is constantly changing and investors are looking for ways to achieve stable returns even in a turbulent environment. With new tariffs on Canadian oil and gas imports, the focus is shifting to domestic producers who can benefit from rising prices and increased demand.

Analysts view the shares of Chord Energy (CHRD) and Diamondback Energy (FANG) as attractive companies with growth potential as well as solid dividends.

Chord Energy $CHRD

Chord Energy was formed from the merger of Oasis Petroleum and Whiting Petroleum, making it a key player in the Williston Basin, primarily in North Dakota and Montana. The company focuses on low-cost oil and gas production, using technologically advanced drilling methods and strategic acquisitions to strengthen its market position.

Performance and potential

CHRD's share price has declined 26% over the past year, with a modest decline of around 4% YTD. Despite this volatility, the stock looks undervalued with a P/E ratio of 6.27x, well below the sector average (12x). The company has a market capitalization of $6.87 billion and maintains a sustainable dividend policy with a yield of 5.44%.

Chord delivered strong results in Q3 2024, with oil production of 158.8k bpd, which was in the upper range of expectations. Adjusted EBITDA was $674.5 million and free cash flow was $312.5 million, 75% of which was returned to shareholders through buybacks and dividends.

The future of the company

Chord Energy plans to invest $1.4 billion per year between 2025 and 2027 to maintain stable production and expects synergies of $200 million following the merger with Enerplus. Analysts rate CHRD stock a "Strong Buy" with an average target price of $172.44, representing a potential upside of 53% from current levels.

Diamondback Energy $FANG

Diamondback Energy is a leading oil and gas exploration player with core operations in the Permian Basin, one of the most prolific producing areas in the US. Following its merger with Endeavor, the company has consolidated its position and increased its production capacity.

Performance and potential

FANG shares are up nearly 9% over the past year, trading with minimal change (-0.2%) since the beginning of 2025. The company has a market capitalization of $48 billion and a P/E ratio of 10.52x, below the sector average, suggesting an attractive valuation given its strong earnings and cash flow.

Diamondback has a long-term focus on shareholder reward, as evidenced by its dividend yield of 2.19% and six consecutive years of dividend increases.

The future of the company

In the third quarter of 2024, the company generated $1.2 billion in operating cash flow and $1 billion in free cash flow. Of this amount, 78% was returned to shareholders in the form of share repurchases and a dividend of $3.60 per share.

Following the acquisition of Endeavor Energy Resources in September 2024, the company achieved record production of 571,100 barrels of oil equivalent per day and increased the size of its share repurchase program to $6 billion.

The company is also investing in innovation - partnering with Halliburton (HAL) and VoltaGrid to deploy electric simul-frac fleets to increase efficiency and sustainability in the Permian Basin. Subsidiary Viper Energy (VNOM) recently acquired new licensing and ownership rights, which strengthens Diamondback's assets and cash flow.

Analysts view Diamondback's future positively, with the stock having a consensus rating of "Strong Buy" and an average target price of $213.38, a 30% change from the current share price.

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Source: barchart