2 High-Yield Energy Stocks to Buy With $1,000 and Hold Forever

Oil and natural gas prices can move in unexpected ways and do so in a dramatic and rapid fashion. The geopolitical conflicts playing out today are yet another evidence point that energy investors need to be prepared to deal with often headline-grabbing and perhaps shocking volatility.

If you are looking for a high-yield energy stock today, you'll be better off sticking with a reliable giant like Chevron (NYSE: CVX) or attempting to sidestep energy prices with an investment in a midstream giant like Enterprise Products Partners (NYSE: EPD). Here's what you need to know.

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1. Chevron gives you direct exposure to energy

If what you are really looking for is some exposure to oil and natural gas, then Chevron and its roughly 4.7% dividend yield could be for you. A $1,000 investment will net you around six or seven shares today. The big story here, however, is the impressive history of dividend growth, with dividend increases in each of the last 38 years.

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Oil and natural gas prices have gone through many dramatic swings over that span, and still, Chevron has remained committed to supporting its dividend. It is built to survive such energy market swings. For starters, its business is diversified across the energy sector and geographically. Having exposure to the upstream (energy production), the midstream (pipelines), and the downstream (chemicals and refining) helps to soften the peaks and valleys since each segment operates a little differently through the energy cycle. Having exposure to various global energy markets on the supply and demand side allows Chevron to focus its investments in the areas with the highest returns.

Then there's the energy giant's balance sheet, which is rock solid. With a debt-to-equity ratio of around 0.2x, it has notably less leverage than most of its closest peers. This gives management the leeway to take on debt during industry weak spots so it can continue to support its business and dividend. When oil prices recover, as they always have historically, Chevron simply reduces its leverage to prepare for the next industry downturn.

Playing it as safe as possible with high-yield Chevron is a good call for dividend investors that want more direct oil exposure.

2. Enterprise Products Partners shifts the energy playbook

But you don't have to have direct exposure to oil prices if you want to invest in dividend-paying energy stocks. That's because the midstream segment is the one part of the energy industry that works a little differently. Businesses like Enterprise Products Partners own the energy infrastructure, like pipelines, that move oil, natural gas, and the products into which they get turned around the world.

What sets the midstream apart from the upstream and the downstream is that the midstream largely charges fees for the use of energy infrastructure assets. In other words, businesses like Enterprise Products Partners are just toll-takers. The volume of products moving through its portfolio of assets is more important than the price of those products. And since energy is so vital to modern life, demand for energy tends to be high regardless of the price of oil. The reliable cash flow Enterprise generates is what supports the master limited partnership's (MLP's) lofty 6.8% distribution yield.

A $1,000 investment in Enterprise will leave you owning around 31 shares of the MLP. But, like Chevron, a key part of the story here is the distribution history. Enterprise has increased its disbursement every year for 26 consecutive years. And, like Chevron, Enterprise is financially strong (it has an investment-grade-rated balance sheet) and conservatively run. The distribution yield will make up the vast majority of your total return here, but if you are trying to maximize the income your portfolio generates, that probably won't bother you.

Two solid energy options for volatile times

Given the current volatility in the energy sector, Chevron and Enterprise are good options for investors right now. But they are usually good options in the energy sector because they are built to deal with the industry's volatility while rewarding investors for sticking around with dividends. If you have $1,000 and you want to add an energy stock, one of these two will be a good dividend-focused pick for your portfolio.

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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.