3 Dividend Stocks That Didn't Need $100 Oil to Keep Raising Their Payouts

In early September, the prices of West Texas Intermediate (WTI) and Brent crude oil briefly soared above $100 per barrel as the conflict in Iran dragged on. That rally lifted many oil stocks, but it also slammed other industries with higher labor and logistics costs.

As of this writing, WTI trades at about $91 per barrel, while Brent remains above $100 per barrel. Those high prices will enable dividend-paying oil companies to generate ample cash to cover their payouts, but some investors might worry about dividend cuts if oil prices tumble.

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But if we look closer at the big upstream, midstream, and downstream players, we'll find plenty of companies that can easily afford to raise their dividends even if the price of crude oil sinks far below $100. Let's see why three of them -- Occidental Petroleum (NYSE: OXY), ExxonMobil (NYSE: XOM), and Energy Transfer (NYSE: ET) -- are still worth buying today.

Occidental Petroleum

Occidental Petroleum, more commonly known as Oxy, generates most of its profits from its upstream business. Upstream companies flourish when oil prices are high, since their revenues generally rise much faster than their operating expenses. Oxy also divested its downstream business -- which fares better when oil prices are lower -- earlier this year.

Oxy produces the vast majority of its gas and oil in the U.S., so it's well-insulated from overseas conflicts. It also continues to reduce its drilling times, cut its structural costs, and increase its cash flow by integrating the assets it acquired through its 2024 acquisition of CrownRock.

Oxy pays a forward dividend yield of 1.9%, and it's raised its payout annually for five consecutive years. Its low trailing payout ratio of 30% gives it plenty of room for future hikes, and it only needs WTI crude oil prices to stay above its corporate breakeven price of $40 per barrel to support its capex and dividends. So while Oxy's upstream business would certainly benefit from soaring oil prices, it can still easily raise its dividends if oil prices pull back.

ExxonMobil

ExxonMobil, one of the world's largest integrated energy companies, owns upstream, midstream, and downstream assets in over 56 countries. That diversification makes it a less direct play on rising oil prices than Oxy, but it's also better insulated from a pullback.

Regardless of what happens to oil prices in the near term, ExxonMobil plans to increase its oil and gas production by nearly 3% annually through 2030. It gets most of its oil in the U.S., but it's been expanding in Asia, Africa, and South America. It has a bit more exposure to the Middle East than its closest competitors, but it offsets that pressure with its scale and diversification.

ExxonMobil only needs Brent crude oil prices (the preferred metric for multinational oil companies) to remain above $35 per barrel to cover its capex and dividends. It's raised its dividends annually for 43 consecutive years, pays a forward yield of 2.5%, and its trailing payout ratio of 53% suggests that streak will continue for the foreseeable future.

Energy Transfer

Energy Transfer, which operates over 140,000 miles of pipeline across 44 states, is one of the country's largest midstream companies. It delivers crude oil, natural gas, natural gas liquids (NGL), and other refined products through its pipelines and marine export terminals.

As a midstream company, Energy Transfer simply collects "tolls" from upstream and downstream companies that transport resources through its pipelines. That business model is naturally insulated from volatile commodity prices, since it only needs those resources to keep flowing through its infrastructure to generate stable profits.

As a master limited partnership (MLP), Energy Transfer blends a return of capital with its own income to pay distributions that are more tax-efficient than traditional dividends. It spends only about half of its distributable cash flow (DCF) on distributions each year, has raised its payout annually for four consecutive years, and pays a high forward yield of 6.8%. It won't profit as much from high oil prices as Oxy or ExxonMobil, but it will remain a reliable, high-yield play for income-oriented investors.

Leo Sun has positions in Energy Transfer. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.