1 Monster Energy Stock to Hold for the Next 20 Years (And Shares Are Still Under $50)

Devon Energy (NYSE: DVN) combines low-cost oil production, a proven capital return framework, and a transformative merger that makes it structurally larger and more durable. Shares are currently trading under $50.

Pillar one: A durable business built on low-cost production

The long-term structural case for Devon starts at the wellhead. Production costs came in at $8.60 per Boe in Q4 2025, 3% below guidance, against a WTI price of $64.51 per barrel in February 2026. That spread is the margin of safety that keeps Devon profitable when oil dips. Even during the pandemic trough of April 2020, when WTI collapsed to $16.55 per barrel, Devon kept generating operating cash flow and maintained its dividend. The business did not break; it bent.

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The reserve base reinforces the durability argument. Devon holds 2.4 billion barrels of oil equivalent in proved reserves with a 193% reserve replacement rate, meaning it is replenishing what it produces at nearly twice the rate. That is not a company running down the clock on its assets. That is a company with decades of inventory ahead of it.

The pending merger with Coterra Energy (NYSE: CTRA) adds another layer of durability. Devon shareholders will retain approximately 54% of the combined entity, and the deal targets $1 billion in annual pre-tax synergies, with a close expected in Q2 2026. The merged company becomes one of the largest independent shale operators in the country, with greater geographic diversification and more negotiating leverage across the supply chain.

Pillar two: Income that compounds over time

Devon pays a fixed quarterly dividend of $0.24 per share, with the Q1 2026 payment declared February 17, 2026, and payable March 31, 2026. That is a 2.1% yield at the current price, modest on its own. But post-merger, the dividend is expected to increase 31% to $0.315 per quarter, and a new buyback authorization exceeding $5 billion is anticipated. Devon's existing program has already retired approximately 14% of shares outstanding since inception, which mechanically lifts per-share income over time even when the headline payout stays flat.

The cash flow engine behind these returns is real. FY2025 free cash flow came in at $3.1 billion, a dramatic recovery from negative $853 million in 2024 when capex was elevated. That $3.1 billion covers dividends, buybacks, and debt reduction with room left over.

Pillar Three: Surviving the Cycle

Energy investors get punished when they forget that oil is cyclical. Devon's answer to the cycle is cost discipline. FY2025 capital expenditures came in at $3.59 billion, down sharply from $7.45 billion in 2024, while production held steady. That reinvestment efficiency is what separates companies that survive downturns from those that cut dividends and dilute shareholders to stay alive.

The one scenario where Devon underperforms is a prolonged oil price collapse below $40 per barrel. In that environment, free cash flow compresses, the variable component of shareholder returns shrinks, and the stock will trade lower. That is the honest risk. But WTI has recovered above $60 within 12 to 24 months after every major collapse in the past 40 years, and Devon's low lifting costs mean it stays cash-flow positive longer than most peers. The cycle does not break this business; it just creates price volatility.

At today's prices, Devon trades for only 11x trailing earnings with a transformative merger closing this quarter, Devon's metrics reflect a combination of valuation, income, and scale that analysts and investors continue to monitor closely.

Austin Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.