Warren Buffett's Berkshire Hathaway (BRK.B) initiated small positions in Ulta Beauty (ULTA) and Heico (HEI) in the second quarter, bought more Chubb (CB), pared stakes in eight names – most notably, Apple (AAPL) and Chevron (CVX) – and exited bets on Paramount (PARA) and Snowflake (SNOW).

There were other moves, as well, but the biggest news to come out of Berkshire's latest regulatory filing was already known. Buffett slashed Berkshire's stake in Apple by almost half. As previously reported, the holding company also reduced its exposure to top holdings such as Chevron and Bank of America (BAC).

Keep in mind that Buffett told Berkshire shareholders that the Apple sales were done for tax purposes, as he expects corporate tax rates to rise sometime in the not-too-distant future. The same thinking could apply to BRK.B's other sales, but then it's not unusual for Buffett to be a net seller of equities when stocks are trading at record levels.

All told, Berkshire sold roughly $77 billion in equities in Q2 – mostly Apple – and purchased less than $2 billion. At any rate, with exactly 400 million Apple shares still in the portfolio, Buffett would appear to be done selling his favorite stock.

Earlier this year, the greatest long-term investor of all time said AAPL is "even better" than American Express (AXP) or Coca-Cola (KO), two "wonderful" businesses that Berkshire has owned since the early 1960s and late 1980s, respectively.

Perhaps it's a coincidence, but Berkshire now holds 400 million AAPL shares – or the exact same number of shares it has held in KO for decades. 

Before we detail Berkshire's quarterly buys and sells, it's important to know that Buffett has always maintained a highly concentrated portfolio. The top five holdings account for almost three-quarters of its U.S. equities portfolio value, while the top 10 account for more than 90%. 

As Buffett likes to say, diversification is for people who don't know what they're doing.

Stocks Warren Buffett is buying

Berkshire picked up two new stocks in Q2: Ulta Beauty and Heico. Berkshire bought 690,000 shares of Ulta Beauty worth $266 million at the end of the Q2. With a weight of 0.1% in the Berkshire Hathaway portfolio, or its 30th largest position, the cosmetics retail chain won't be moving the needle much on Berkshire's returns.

Meanwhile, with a weight of just 0.07%, Heico is even less material. Berkshire accumulated a little more than 1 million shares in the supplier to the aerospace industry. The stake was worth $185 million as of the end of Q2. 

The comparatively small size of the purchases could mean they were initiated by Buffett's co-portfolio managers Ted Weschler or Todd Combs.

On the other hand, one of the largest additions Berkshire made in Q2 was probably the work of Buffett himself. As previously disclosed, BRK.B bought another 7 million shares in Occidental Petroleum (OXY). (Buffett has added to OXY on weakness in the past.) The holding company owned 255 million shares worth $16 billion at the end of the quarter. At 5.8% of its portfolio, OXY is Berkshire's sixth largest holding.

In another interesting move, Buffett also added to Chubb, the insurance company Berkshire first picked up just a quarter ago. The holding company increased its stake by 4.3%, or more than 1 million shares. With roughly 27 million shares worth $6.9 billion at quarter's end, Chubb accounts for a hefty 2.5% of the portfolio, or Berkshire's ninth largest holding.

Elsewhere, Berkshire fiddled with some of its smallest positions, upping its bets on rather immaterial holdings such as Liberty Sirius XM Group, Series C (LSXMK) and Liberty Sirius XM Group, Series A (LSXMA). Note that the company cut its stakes in the tracking stocks last quarter. Berkshire also bought more Sirius XM Holdings (SIRI) – a position it reduced in Q1.

Stocks Warren Buffett is selling

As noted above, Apple accounted for almost all of Berkshire's Q2 sales. Other reductions included Chevron, a Buy-rated Dow Jones stock, which Buffett first purchased four years ago. In Q2, Berkshire cut CVX by 3.6%, or 4.4 million shares. With 119 million shares worth $18.6 billion at the end of the quarter, the integrated oil major is Berkshire's fifth largest holding.

Other sales included a more than 20% reduction in Capital One Financial (COF). Berkshire sold 2.7 million shares in the financial services company in Q2, bringing its position down to 9.8 million shares worth $1.4 billion. With a 0.49% weight in the portfolio, COF is Berkshire's 19th largest bet. 

Berkshire also continued to clean and prune a number of its mid-level equity holdings, paring its stakes in T-Mobile US (TMUS), Louisiana Pacific (LPX), Liberty Media (LLYVK), Liberty Media (LLYVA) and specialty retailer Floor & Decor (FND).

Buffett also closed out its stake in Paramount, dumping all 7.5 million shares. The company first bought PARA in early 2022. It didn't work out.

Lastly, Berkshire exited its position in Snowflake (SNOW), which is believed to have been the work of subaltern Todd Combs. Berkshire made a rare bet on an initial public offering (IPO) with Snowflake in the third quarter of 2020. SNOW has an all-time total return of negative 16%.

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Warren Buffett stepped down as CEO of Berkshire Hathaway (BRK.B) at the end of 2025, and although he remains chairman, the holding company's stock portfolio is under new management.

Buffett always handled the largest positions in the Berkshire Hathaway portfolio, but those days are no more. The greatest long-term investor of all time still keeps his hand in and plays a key advisory role. Investment manager Ted Weschler also continues to manage perhaps 5% of Berkshire's stock investments.

But there's no question that CEO Greg Abel is now calling the shots.

In the first quarter of 2026, Abel reduced or closed out positions in 22 names, many of them thought to be picks by former investment manager Todd Combs, who decamped to JPMorgan Chase (JPM) at the end of last year.

The overhaul shouldn't come as a shock. After all, Berkshire's portfolio has been changing dramatically for years now. Although old-guard favorites such as American Express (AXP) and Coca-Cola (KO) still form the core of the portfolio, Buffett & Co. have taken a shine to names such as Apple (AAPL), most recently, Alphabet (GOOGL).

One thing that hasn't changed, however, is Buffett's preference for maintaining a highly concentrated portfolio.

Excluding the company's Japanese brokerage stocks and other overseas equities, Apple alone accounts for more than a fifth of Berkshire's U.S. stock portfolio, according to data from WhaleWisdom. (That's down from more than 40% at its peak.)

Furthermore, Berkshire's top five U.S. equity holdings comprise about 67% of its portfolio value, while the top 10 account for 90%.

As Buffett likes to say, diversification is for those who don't know what they're doing.

Regardless, whether we're talking about Berkshire's biggest bets or the scores of stocks it maintains at the margins, Buffett's focus shifted after the COVID-19 pandemic.

Berkshire used to see value in a host of big bank stocks. Today, the holding company is far more selective. Healthcare stocks and payments processors were a long-time Buffett bet. But not anymore.

If you want to know which stocks Berkshire is buying and selling, look no further than our portfolio analysis.

Price, share totals and other data as of March 31, 2026. Sources: Berkshire Hathaway's SEC Form 13F filed May 15, 2026, for the reporting period ended March 31, 2026; and WhaleWisdom.

The Berkshire Hathaway portfolio

Stocks Berkshire is buying

Buffett famously avoided airlines for decades. When he finally did come around, his timing was terrible, spreading his bets among a handful of major carriers not too long before COVID-19 set the industry into a tailspin. As a result, he quickly closed out those positions.

So it's a mark of change that Berkshire initiated a stake in Delta Air Lines in Q1, buying 39.8 million shares worth $2.6 billion. With a portfolio weight of a bit more than 1%, the air carrier is Berkshire's 14th-largest holding.

As noted above, Berkshire also made a bet on the consumer discretionary sector, picking up 3 million shares in Macy's. The tiny position in the department store operator was worth $55 million as of the end of Q1. At less than 0.1% of the portfolio, M stock is Berkshire's 27th-largest investment.

More interestingly, Berkshire more than tripled its stake in Google parent Alphabet (GOOGL). The holding company now owns 54 million shares worth $15.6 billion as of the end of Q1. With a weight of 5.9%, the Google parent's Class A shares are Berkshire's 7th-largest U.S. equity holding. Berkshire first bought GOOGL in the third quarter of 2025.

Relatedly, Berkshire initiated a stake in Alphabet Class C (GOOG) stock, picking up 3.6 million shares during the first three months of the year. With a value of $1 billion, the Class C investment accounts for Berkshire's 19th-largest holding.

In another vote of confidence in an existing position, Berkshire tripled its holdings of The New York Times Co. (NYT), adding another 10 million shares during Q1. With a market value of $1.3 billion, or 0.5% of the portfolio, NYT is Berkshire's 17th-largest investment — up from 30th place when it first bought the stock at the end of 2025.

Berkshire also added to homebuilder Lennar (LEN), an investment Berkshire initiated last year. The holding company bought another 3 million shares to bring its total stake to 10 million. With a market value of $877 million, LEN accounts for 0.3% of the portfolio, or the 21st-largest investment. Berkshire picked up more Lennar Class B (LEN.B) stock, as well. However, at less than 0.1% of the portfolio, it's essentially immaterial to a company of Berkshire's size.

Stocks Berkshire is selling

Berkshire reversed course on Chevron (CVX) in Q1, cutting its position in the integrated oil major by 35%. After boosting its stake in Q4, the holding company sold 46 million shares to start the year. Berkshire, which has owned the Buy-rated Dow Jones stock since the fourth quarter of 2020, still owns more than 84 million shares worth $17.5 billion as of quarter's end. And with a weight of more than 6.6% in the portfolio, CVX remains Berkshire's fifth-largest holding.

In another reprise from previous quarters, Buffett once again sold Bank of America (BAC) stock, which has been a major holding since 2017. Don't panic, though. Berkshire reduced its investment in the nation's second-largest bank by assets by less than 1%.

With 513 million shares worth more than $25 billion as of March 31, BAC slipped one place, to Berkshire's No. 3 holding.

In other sales, Berkshire continued to ease up on DaVita (DVA), its 11th-largest holding, this time 5%. The company also massively reduced exposure to Constellation Brands (STZ), a stake it initiated at the end of 2024, by 95%.

Elsewhere, Berkshire cut its stakes in Liberty Live Holdings (LLYVK) and Nucor (NUE), but with portfolio weights of less than 1%, respectively, these names don't move the needle.

The biggest changes came in the form of exits. After slashing its stake by 77% last quarter, Berkshire closed out its position in Amazon.com (AMZN).

A number of other familiar names were also banished from the portfolio. Apparently Berkshire is no longer a fan of payments processors, having exited its stakes in both Visa (V) and Mastercard (MA). The holding company owned both stocks since 2011.

Also getting the boot were Charter Communications (CHTR), Diageo (DEO), UnitedHealth Group (UNH), Domino's Pizza (DPZ), Heico (HEI), Lamar Advertising (LAMR), Formula One Group (FWONK), Atlanta Braves Holdings (BATRK), Pool Corp. (POOL), Allegion (ALLE), Aon (AON), Liberty Latin America Class A (LILA) and Liberty Latin America Class C (LILAK).

Berkshire's top five holdings

• Warren Buffett has always maintained a concentrated Berkshire Hathaway equity portfolio.
• The top five positions in the Berkshire portfolio account for 67% of its total value.
• Apple, American Express, Coca-Cola, Bank of America and Chevron are the five largest holdings.

As noted above, Buffett has always maintained a highly concentrated portfolio. Indeed, he's said that "diversification makes very little sense for anyone who knows what they're doing."

The stocks below accounted for 67% of Berkshire's total U.S. equities portfolio value as of the end of Q1. If you want to know what's driving the bulk of the Buffett's returns, check out the names below.

Apple

Buffett has called Apple "Berkshire's third business," so it should come as no surprise that the iPhone maker routinely takes the top spot among the holding company's positions.

True, Berkshire has pared its stake in Apple in recent quarters, but Buffett has assured shareholders he adores AAPL as much as ever. BRK.B's former CEO took pains to explain that the iPhone maker is still — er — the Apple of his eye.

For the record, the sales were for tax purposes. The greatest long-term investor of all time said that AAPL is "even better" than American Express or Coca-Cola, two "wonderful" businesses that Berkshire has owned since the early 1960s and late 1980s, respectively.

More recently, Buffett said he wasn't comfortable with Apple accounting for such an outsized weight in the portfolio.

As Apple's sixth-largest shareholder, Berkshire's continuing interest in the iPhone maker has market-wide implications.

American Express

Berkshire closed out its stakes in payments processors Visa (V) and Mastercard (MA), but it continues to adore American Express.

Buffett took his first stake in AmEx in the 1960s, and it’s still paying off a half-century later.

There's a lot to love about AmEx: Its management is strong; it's a dominant brand in the industry; and it generates copious amounts of free cash flow — the money left after essential capital expenditures are made that can be used to finance dividends and stock buybacks.

The current yield on the dividend isn't eye-catching, but it is safe and growing. The stock is only slightly more volatile than the broader market. Those are attributes that will help long-term investors sleep better at night.

Coca-Cola

Buffett famously drank Coca-Cola for 52 years before investing in the stock.

He finally took the plunge in 1988. "We expect to hold these securities for a long time," Buffett wrote back then of his new stake in Coke in a letter to Berkshire shareholders. "In fact, when we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever."

As of the end of Q1 2026, Berkshire owned 9.3% of Coca-Cola’s outstanding shares. Analysts like the stock's prospects, too. Wall Street gives KO a consensus recommendation of Buy, with strong conviction.

Bank of America

Bank of America is Berkshire Hathaway's fourth-largest holding. Buffett first acquired BAC stock in Q3 2017. Berkshire is the bank's second-largest institutional shareholder.

In an April 2023 media appearance, Buffett said that he unloaded many of the holding company's bank stocks because he didn't think they were near as solid investments as they once were. As for Bank of America, he said this about the bank and its CEO:

"I like [CEO] Brian Moynihan enormously. And I just don't wanna, I don't wanna sell it," the then 92-year-old CEO told CNBC's Becky Quick.

"But I did sell banks that we'd owned for 25 or 30 years. And if they asked me why I did it, I told them — I just think the system isn't set up quite right in terms of connecting punishment to culprits on something that's important," Buffett added.

Chevron

Thanks to the outlook for crude oil prices, the energy sector is enjoying steady and predictable free cash flow. Chevron, the only energy name among all 30 Dow Jones stocks, is returning some of this cash to shareholders through dividends and buybacks.

Make no mistake: There are few things Buffett likes more than dividends and buybacks.

It also helps that oil is a solid hedge against inflation. With inflation still running ahead of the Federal Reserve's 2% target, commodities should remain in favor.

Berkshire's massive pile of cash, equivalents and short-term investments is much better put to use in an asset such as Chevron under such conditions.

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Stocks opened mostly higher Friday as investors took in the latest inflation data and earnings reports. The main indexes lost steam as the session wore on, though the tech-heavy Nasdaq Composite held on for a win thanks to impressive earnings from mega-cap stock Amazon.com (AMZN).  

The Bureau of Economic Analysis this morning said its September personal consumption and expenditures (PCE) index, the Fed's preferred measure of inflation that tracks consumer spending, was up 0.4% month-over-month and 3.4% year-over-year – both figures matching what was seen in August.

Meanwhile, the monthly increase (+0.3%) in the core PCE index, which excludes volatile food and energy prices, was higher than the previous month, though the annual increase (3.7%) was lower.

Today's data "provided confirmation that the Federal Reserve’s monetary policy is continuing to reduce inflation over time, albeit slowly," says Brian Pietrangelo, senior vice president and managing director of investment strategy at Key Private Bank. "We believe the Federal Reserve is highly likely to pause interest rate hikes next week given the directional slowing of PCE inflation to wait for additional data, including the Employment Situation next Friday, to consider for the December meeting."

JPMorgan stock sinks on news Dimon will sell shares

JPMorgan Chase (JPM) was one of the worst Dow Jones stocks Friday after a securities filing revealed Jamie Dimon, CEO of the financial giant, plans to sell 1 million JPM shares in 2024. Dimon currently owns 8.6 million shares of JPM, and it will mark his first stock sale since he took over the head role in 2006. 

"Mr. Dimon continues to believe the company’s prospects are very strong and his stake in the company will remain very significant," JPMorgan Chase said in the 8-K filing. Nevertheless, the blue chip stock tumbled 3.6% today.

However, the worst Dow stock today was Chevron (CVX), which plunged 6.7% after the oil major reported third-quarter earnings of $3.05 per share – well below the $3.70 per share analysts were expecting. Still, revenue of $51.9 billion came in above estimate. Earlier this week, Chevron said it will buy fellow energy firm Hess (HES) for $53 billion in stock.

Amazon earnings keep Nasdaq above water

As for the main indexes, the blue chip Dow Jones Industrial Average fared the worst, shedding 1.1% to 32,417. The S&P 500 fell 0.5% to 4,117, ending in correction territory following a 10% decline from its July 31 closing high of 4,588.96. 

The Nasdaq, which entered a correction on Wednesday, eked out a 0.4% gain to 12,643, thanks to impressive Amazon earnings. The e-commerce giant reported much higher than expected third-quarter earnings of 94 cents per share on revenue of $143.1 billion. Operating income of $11.2 billion came in well above the company's forecast, though revenue growth (+12% year-over-year) in the company's Amazon Web Services (AWS) cloud segment was softer than anticipated. AMZN stock surged 6.8% today.

There are plenty of big events next week that have the potential to spark volatility in stocks. In addition to the Fed meeting and Friday's jobs report, several high-profile companies – including tech giant Apple (AAPL, +0.8%) – are on the earnings calendar.

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Warren Buffett's Berkshire Hathaway (BRK.B) initiated a position in Capital One Financial (COF) in the first quarter, reduced its stakes in nine other stocks and exited holdings in four more names, including Bank of New York Mellon (BNY) and U.S. Bancorp (USB).

In total, Berkshire Hathaway was a net seller of equities to the tune of $10.4 billion during the first three months of the year. The holding company also spent $4.4 billion buying back its own stock.

On the buy side of Berkshire's ledger, chairman and CEO Warren Buffett – or his co-portfolio managers Ted Weschler or Todd Combs – bought 9.9 million shares in COF worth $954.9 million as of March 31, according to regulatory filings. With a 0.3% weighting, however, the stock represents a tiny part of the Berkshire Hathaway portfolio.

The addition of Capital One, a bank holding company, is notable in that Buffett has mostly been getting out of bank stocks for some time. At the Berkshire Hathaway annual shareholder meeting in May, the legendary long-term investor said he first lost his appetite for bank stocks at the beginning of the pandemic, citing an overly complicated banking system, mismanagement and bad incentives.

Berkshire has dumped shares in JPMorgan Chase (JPM), Goldman Sachs (GS), Wells Fargo (WFC) and PNC Financial (PNC) over the past few years. BNY and USB have now joined the list of former Berkshire bank holdings.

"The American public doesn’t understand their banking system — and some people in Congress don’t understand it anymore than I understand it," Buffett told the Berkshire faithful earlier this month.

Buffett does maintain a major position in Bank of America (BAC). Other financial sector holdings include American Express (AXP), Jefferies Financial Group (JEF), Citigroup (C) and Visa (V), to name a few.

In another move on the buy side of the ledger, Berkshire upped its stake in Occidental Petroleum (OXY) by 17.4 million shares in Q1. As was previously disclosed, Berkshire now holds 211.7 million shares worth $13.2 billion as of quarter's end. Although Berkshire owns roughly a quarter of OXY's common stock – and has regulatory approval to purchase up to half of the oil and gas firm's shares – Buffett said at the annual meeting that Berkshire will not acquire it outright. 

Warren Buffett was much busier selling

In addition to eliminating its equity investments in Bank of New York Mellon and U.S. Bancorp, Buffett also sold off the remainder of Berkshire's stake in Taiwan Semiconductor (TSMC) in Q1. Berkshire slashed its TSMC holdings by 86% in the fourth quarter after initiating a major position just three months earlier. 

Buffett attributed his abrupt volte-face on TSMC to concerns over China's increasingly bellicose claims to the island nation. "I don't like its location, and I've reevaluated that," Buffett said.  

Berkshire also exited its stake in RH (RH), formerly known as Restoration Hardware. 

As previously disclosed, Buffett cut Berkshire's stake in Chevron (CVX) by 18%, leaving it with 132.4 million shares worth $21.6 billion as of March 31. The CVX stake now accounts for 6.7% of the Berkshire equity portfolio, or its fifth largest holding, down from 9.8% three months ago. 

In another notable move, Buffett slashed Berkshire's equity investment in General Motors (GM) by a fifth. The stake is thought to have been initiated by Weschler or Combs, but Buffett did weigh in on the auto industry at the company's annual meeting, saying "I don’t think I can tell you what the auto industry will look like five or 10 years from now."

Other reductions saw Berkshire pare stakes in McKesson (MKC), Celanese (CE), Activision Blizzard (ATVI), Jefferies Financial (JEF), Amazon.com (AMZN), Aon (AON) and Ally Financial (ALLY). 

Berkshire Hathaway has always maintained a highly concentrated portfolio. And a change in the way it reports the stock holdings of a subsidiary boosted its recorded ownership in a number of companies, even though Berkshire didn't buy more shares. 

Rising share prices in some of its largest investments also increased the concentration of Berkshire's holdings. For example, Apple (AAPL) now accounts for more than 46% of the portfolio, up from 38.9% at the end of Q4. 

All told, Berkshire Hathaway's five largest equity investments – AAPL, BAC, AXP, Coca-Cola (KO) and CVX – comprise almost 78% of the portfolio's total value. 

Much of AAPL's increased weighting in the portfolio can be attributed to the fact that Apple stock is soaring in 2023. Shares in the company, which Buffett has called Berkshire's "third business," are up by a third for the year-to-date. 

Of course, Apple is one of the best stocks of the past 30 years. A mere $1,000 invested in Apple stock 20 years ago would have generated stupefying returns too.

Warren Buffett's Berkshire Hathaway (BRK.B, $302.82) took advantage of the market's second-quarter swoon to add to its stakes in Apple (AAPL, $173.16), Chevron (CVX, $156.80), Occidental Petroleum (OXY, $64.34) and a handful of other stocks, but the holding company didn't make any exciting or surprising new moves, a regulatory filing made late Monday revealed.

Chairman and CEO Buffett, along with co-portfolio managers Ted Weschler and Todd Combs, were once again net purchasers of equities during the three months ended June 30, although their pace of buying slowed considerably compared with Q1.

After subtracting sales, Berkshire spent $3.8 billion on stocks during the second quarter, down from net purchases of $41 billion in equities during the first three months of 2022. The S&P 500 lost more than 16% of its value during the second quarter. Suffice to say that Buffett and his lieutenants were once again greedy when others were fearful.

It's also worth noting that Buffett and his subalterns' buying stands in stark contrast to last year's second quarter, when Berkshire was a net seller of equities. And, for good measure, Buffett also spent $1 billion buying back Berkshire Hathaway stock during Q2.

Among the notable additions, Buffett bought another 3.9 million shares in Apple, which is Berkshire's largest position by a wide margin.

The company owned nearly 895 million shares in the iPhone maker, a stake worth $122.3 billion as of June 30. AAPL accounted for 41% of Berkshire's portfolio value at the end of Q2. That's down from 43% at the end of the first quarter due to a slump in Apple's share price.

Buffett has also been aggressively adding to Berkshire's stake in Occidental Petroleum. Berkshire bought an additional 9.6 million shares – worth about $530 million – in the integrated oil and gas firm in late June. The holding company again added to its stake in July, buying another 4.3 million OXY shares worth $250 million.

Including warrants, Berkshire owns roughly 30% of OXY's shares outstanding. Naturally, the conglomerate's large and growing position in OXY is fueling speculation that Buffett could be eyeing a buyout of Occidental Petroleum.

In some other notable purchases, Berkshire topped off existing stakes in Chevron, Celanese (CE, $116.22), Paramount Global (PARA, $26.55) and Ally Financial (ALLY, $35.68)

On the other side of Berkshire's ledger, the company exited what remained of its small stake in Verizon (VZ, $45.55), the only telecommunications stock in the Dow Jones Industrial Average. Berkshire also closed out its short-lived position in Royalty Pharma (RPRX, $43.87).

In other stock sales, Berkshire slashed its stake in Store Capital (STOR, $29.24) by more than 50%. Buffett also reduced Berkshire's exposure to General Motors (GM, $39.40) and Kroger (KR, $47.52).

Ultimately, however, Buffett and his lieutenants had themselves a relatively quiet quarter, making mostly immaterial moves. The Berkshire Hathaway portfolio is highly concentrated, after all, with its top five holdings accounting for 75% of the total portfolio value. STOR, GM and KR don't really move the needle here.

And so although Berkshire went on a shopping spree in Q2, it mostly consisted of bargain hunting in a few of Buffett's favorite names. Investors looking for new stock or sector ideas based on the Oracle's Q2 moves didn't get much, if anything, to work with.

U.S. equities followed up last week's losses with a comeback in this week's opening session, but the day's biggest news was a deal cementing an M&A Monday for the ages.

Numerous global bourses finished lower earlier Monday amid worries about a COVID-19 breakout in China and fear that restrictions would weigh on global growth.

"Beijing is on 'high COVID alert," with three days of testing to begin in a central district of Beijing after 15 new cases came to light, which will impact 3 million people," says Jennifer Lee, senior economist for BMO Capital Markets. "Lockdowns are not planned, apparently, but let's see how these tests go and if there are any new cases."

U.S. crude oil futures, which end trading earlier than the stock markets, dropped 3.5% to a two-week low of $98.54 per barrel. That hampered shares of energy firms including Exxon Mobil (XOM, -3.4%) and Chevron (CVX, -2.2%).

However, after opening considerably in the red, stocks rebounded in the afternoon, led by the technology (+1.5%) and communication services (+1.4%) sectors. The Nasdaq Composite gained 1.3% to 13,004, the Dow Jones Industrial Average was up 0.7% to 34,049, and the S&P 500 finished 0.6% to 4,296.

Monday's most significant headline, however, was the juice behind the communication sector's move: a jump in Twitter (TWTR, +5.7%), which has agreed to Tesla (TSLA, -0.7%) CEO Elon Musk's buyout offer of $54.20 per share – a deal worth $44 billion.

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Prior to Monday, TWTR shares hadn't traded close to the offer price amid questions about how serious the offer was and how Musk would pay for the transaction. But recent reports that he had financing, as well as Monday reports that Twitter's board had warmed to – and, later in the day, accepted – Musk's overtures to take the social platform private sent shares up to a close of $51.70. (You can check out our report for more about Musk's deal for Twitter.)

While most social media companies didn't move much on what would be the world's biggest leveraged buyout ever, Digital World Acquisition Corp. (DWAC) – the company behind Donald Trump-backed Truth Social – plunged 12.9%.

Other news in the stock market today:

• The small-cap Russell 2000 improved by 0.7% to 1,954.
• Gold futures shed 2% to settle at $1,896 an ounce.
• Bitcoin also joined in the afternoon rally, advancing 2.0% to $40,278.53. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.
• Coca-Cola (KO) gained 1.1% after the soft drink maker reported first-quarter earnings of 64 cents per share on $10.5 billion in revenue, both figures higher than analysts were expecting. The company also reiterated its full-year forecast for revenue growth of 7% to 8% and earnings-per-share growth of 5% to 6%, even as Coca-Cola suspended operations in Russia. "We think KO's strong results reflect its brand power and ability to thrive in an inflationary environment, as top line improvement was entirely driven by price and mix," says CFRA Research analyst Garrett Nelson, who reiterated a Buy rating on the Dow Jones stock.
• Snowflake (SNOW) – another member of the Berkshire Hathaway equity portfolio – spiked 7.6% after Wolfe Research analyst Alex Zukin intiated coverage on the cloud-based data platform with an Outperform (Buy) rating and $250 price target, a roughly 34% premium to today's close. Zukin believes SNOW could be a major player in the cloud computing space alongside Microsoft (MSFT), Alphabet (GOOGL) and Amazon.com (AMZN), and he sees significant opportunity in replacing legacy data warehouse systems as more customers migrate to the cloud.

Is a Recession Coming? (And If So, Should You Do Anything?)

While the rest of us gawk at a major social platform falling under the control of the world's richest man, market strategists remain fixated on the economy. Linda Kitchens, director in wealth management at Aspiriant, is among those who sees a greater chance of the U.S. economy falling into recession.

"We think recession probabilities for the next 18-24 months are in the 25%-30% range, which is meaningfully higher than where we were at the end of 2021 (probably less than 10% chance of recession then)," she says. "Economically, things like slowing growth, increasingly higher inflation and elevated commodity prices are important things to watch."

But she warns about making any major moves in anticipation.

"While the likelihood of recession has certainly increased, it's important to remind investors to stay focused on having a long-term time horizon, remaining fully invested and avoiding any market timing. As has often been said, 'far more money has been lost by investors trying to anticipate a recession than lost in recessions themselves.'"

To that end, the best thing you can do is position yourself in investments built for the long haul. For some, that means large, blue-chip companies that have been deemed worthy enough for inclusion in the Dow Jones Industrial Average (and we rank all 30 of these mega-cap names here). For others, that means companies that have proven they can not only profit – but share those profits – for decades on end (like the Dividend Aristocrats).

And for still others, one of the best ways to keep calm and steady, regardless of what the economy throws our way, is to hand over the keys. Investors can do quite well by allowing seasoned fund managers who charge reasonable fees to manage the stocks and bonds they want to hold. That's the idea behind the Kip 25: our 25 favorite low-cost mutual funds.

Warren Buffett has been absolutely hoovering up stock in Occidental Petroleum (OXY, $56.15). In a flurry of recent purchases, Berkshire Hathaway (BRK.B, $325.34) bought 91 million OXY shares, or 9.8% of the integrated oil and gas company's shares outstanding.

The addition to the Berkshire Hathaway equity portfolio coincides with the ongoing melt-up in energy prices, which was sparked by the Russian invasion of Ukraine. Global benchmark Brent crude oil futures briefly topped $130 a barrel in the wee hours of Monday trading, and have gained about 30% over the past month.

The common shares Berkshire just purchased add to its already substantial exposure to the energy firm, which includes $10 billion worth of 8% preferred shares, as well as 84 million warrants to purchase OXY stock. Occidental shares must trade above the warrants' exercise price of $59.62 for the warrants to be in the money.

Buffett received the warrants as an equity "kicker" when he bought the preferred shares in 2019. The funding provided by Buffett helped Occidental win its $55 billion bidding war against Chevron (CVX) to acquire Anadarko Petroleum.

If nothing else, Buffett's buying spree has clearly contributed to OXY stock's dramatic outperformance of late. Berkshire Hathaway purchased more than 60 million OXY shares between March 2 and March 4 – and OXY stock jumped more than 28% over those sessions.

Indeed, on March 4 alone, Berkshire picked up a total of 34 million shares. Occidental closed the session up 17.6%, on abnormally heavy volume. For the year-to-date, OXY stock has gained 94% vs. a 35% increase for the S&P 500 energy sector.

Occidental Petroleum isn't the only recent Buffett move intended to expand BRK.B's exposure to the energy sector. Berkshire Hathaway upped its stake in Chevron by 33% in the fourth quarter of 2021, as well. The holding company held 38.2 million shares in the Dow component as of Dec. 31, a stake which is currently worth $6.1 billion.

Both CVX and OXY get consensus Buy recommendations from Wall Street analysts, but they have significantly greater optimism regarding the former's prospects than the latter's.

Of the 29 analysts issuing opinions on CVX stock tracked by S&P Global Market Intelligence, 13 call it a Strong Buy, seven say Buy and nine rate it at Hold.

As for OXY, the Street's view is decidedly more mixed. Ten analysts call it a Strong Buy, three say Buy, 11 have it at Hold, one calls it a Sell and two say Strong Sell.

The Dow Jones Industrial Average crossed the 30,000 threshold for the first time Tuesday as investors seemed to cheer what they hope will be a less politically tumultuous next couple months.

The General Services Administration on Monday evening acknowledged Joe Biden’s presidential election victory, allowing the already-delayed presidential transition process to move forward. Biden spent Tuesday introducing new members of national security and foreign policy teams, though the biggest excitement on Wall Street came from Monday's reports that former Fed chair Janet Yellen could be America's next Treasury Secretary.

Financial stocks such as JPMorgan Chase (JPM, +4.6%) and American Express (AXP, +3.7%) raced out of the blocks, as did the Dow’s lone energy component, Chevron (CVX, +5.0%). But it wasn’t just the “rotation” at work today: Communication services plays such as Disney (DIS, +3.8%) and Comcast (CMCSA, +5.1%) fared well, as did much of the rest of the market.

The industrial average finished with a 1.5% gain to an all-time high 30,046, while the S&P 500 (+1.6% to 3,635) and Russell 2000 (+1.9% to 1,853) also rewrote the record books.

Other action in the stock market today:

• The Nasdaq Composite closed 1.3% higher to 12,036, just 20 points shy of its Sept. 2 high.
• Gold futures dropped yet again, to multi-month lows, off 1.8% to $1,804.60 per ounce.
• U.S. crude oil futures climbed 4.3% to settle at $44.91 per barrel.

Experts' Reactions to Dow 30,000

What’s in a number? At least for this one, not much more than a bit of hoopla. Here's what a few on Wall Street had to say Tuesday:

Ryan Detrick, chief market strategist for LPL Financial: “Although 30,000 isn't much different than 29,999, there is something special about those big milestone numbers."

James McDonald, CEO of alternative investment manager Hercules Investments: “At the end of the day, Dow 30,000 is just a number and the milestone doesn't hold any credence in determining the near-term stock market outlook.”

Scott Knapp, chief market strategist at CUNA Mutual Group: “The Dow passing 30,000 represents achievement of an arbitrarily-set milestone, but it also captures the sentiment of the moment for investors. Drivers include clarity about the election’s outcome to a small degree, and expectations for a highly accommodative environment for risk assets to a large degree.”

What's up next for the markets? Knapp says that while clarity on the presidential transition helps, "it’s not the big story. ... The far bigger influence is expectation for wide distribution of a vaccine that has the potential to quickly reduce economic headwinds caused by the COVID pandemic."

Indeed, it's likely a tug-of-war ahead. On one side, caution as COVID cases continue to mount – a possible second wind for telehealth stocks and other “coronavirus plays.” On the other, additional breakthroughs in vaccines and treatments may continue to fuel the market’s euphoria, which could benefit more speculative stocks. That could mean continued success for some of the most popular picks on the Robinhood app, where younger traders have enjoyed market-beating success buying deeply battered stocks.

It also could mean a warm reception for a number of initial public offerings (IPOs) that are expected to launch between now and early next year. Read on as we look at an updated list of highly anticipated IPOs, including DoorDash, Airbnb and others expected in the next few weeks.

Financial planners often recommend the 4% rule as a guideline for determining the annual amount that a retiree can withdraw from portfolios without depleting their nest egg over a 30-year retirement. And high-yield dividend stocks are a critical component of executing this strategy.

Financial adviser William Bengen devised the 4% rule after evaluating stock and bond data across several decades and discovering that a pattern of 4% yearly withdrawals provided reasonable security without bleeding a portfolio dry for at least 30 years, even through occasional market downturns.

The concept is simple: Draw down 4% of the portfolio value in the first year of retirement, then a matching amount (adjusted for inflation) in each subsequent year. Bengen himself later updated the number from 4% to 4.5%.

It's a good starting point for planning a comfortable retirement, but investors must consider a couple factors when applying it. For instance, the 4% rule doesn't account for big one-time purchases that might push your spending growth above the rate of inflation. It also assumes future market performance will resemble past results.

That said, income from your investments can count toward that amount, so if you draw a high (and preferably growing) yield from your portfolio, it means you'll only need minimal price appreciation to remain on track.

Here are 14 high-yield dividend stocks to buy that yield 4% or more. These picks have other qualities that are beneficial to retirees, too – some feature much lower volatility than the broader market, and many are consistent dividend raisers whose payouts may keep up with or even outrun inflation.

Data is as of Nov. 12. Stocks listed by yield. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.

• Market value: $228.7 billion
• Dividend yield: 4.0%
• Chevron (CVX, $120.96) is one of the world's largest integrated energy majors, and it boasts a significant presence in the Permian Basin – America's largest oil-producing basin. Chevron's Permian Basin oil-equivalent production grew 35% year-over-year, to 455,000 barrels per day; it's targeting production of 650,000 barrels per day by 2020.

In addition to solid Permian production gains, Chevron benefitted from the ramp-up of its offshore Gulf of Mexico wells and prolific LNG (liquid natural gas) projects in Australia.

The company nonetheless suffered a considerable pullback in third-quarter profits, from $4 billion a year ago to $2.6 billion in 2019. But the company was facing difficult comparisons to 2018's robust Q3, as well as a $430 million tax charge.

Chevron generates plenty of cash to support its ample dividend, though. It produced $4.2 billion in levered free cash flow (FCF), which was almost twice what it needed to cover its payout. Over the past 12 months, it has generated $13.5 billion in FCF versus $8.9 billion in dividends paid. That's a stark improvement from where CVX was just a few years ago, when an energy-price plunge in 2014-15 caused the company to burn cash.

Chevron's dividend keeps growing, too. A 6% upgrade in the payout this January marked the company's 32nd consecutive year of dividend growth. At just a hair under 4%, CVX is among the highest-yielding dividend stocks in the Dividend Aristocrats.

BMO Capital analyst Daniel Boyd has an Outperform rating (equivalent of Buy) on CVX stock. He admires the company's strong Permian Basin presence and sustained 5%-plus dividend growth. Goldman Sachs analyst Neil Mehta added Chevron to the firm's 2019 Americas Conviction List after the company's merger with Anadarko Petroleum was terminated. He likes Chevron's free cash flow, strong capital spending program and discipline shown by walking away from the Anadarko deal.

• Market value: $63.6 billion
• Dividend yield: 4.1%
• Southern Company (SO, $60.69) is a diversified energy provider primarily serving customers in the southern states. Its three utility operations provide electricity to approximately 9 million customers across Georgia, Alabama and Mississippi. The company also distributes natural gas to customers in Georgia, Illinois, Virginia and Tennessee, operates a wholesale energy subsidiary (Southern Power) and provides energy technologies to utilities and industrial customers through its PowerSecure segment.

Southern controls more than 44,000 megawatts of generating capacity and has the ability to supply power in all 50 states. The company generates 47% of its power from natural gas, 23% from coal, 16% from nuclear and 14% from renewables.

Unlike most other utility stocks, Southern is investing in nuclear power; the company has the country's only new nuclear units under construction. Its Vogtle 3 and 4 nuclear units will eventually provide power to approximately 500,000 homes and businesses across Georgia. The project was roughly 80% completed as of the end of August.

The company forecasts full year 2019 earnings per share to be lower than last year at the midpoint of guidance. Regulated utility operations are expected to contribute approximately 90% of EPS, while energy infrastructure projects will account for the remainder.

Southern also closed a $1.5 billion equity offering in August and plans to use the proceeds to pay down debt and fund investments in its subsidiaries.

The utility stock has raised its payout annually for 18 years without interruption, including a 3.3% uptick in April. And despite a brisk 43% run year-to-date, SO shares still yield more than 4%. Despite that rally, Southern still trades at just 19 times earnings, which is on its high end historically but isn't nearly as frothy as the utility sector's current 25 P/E.

Analysts are a bit mixed at the moment. Of the seven analysts sounding off on SO over the past three months, just one has rated it a Buy, versus four Holds and two Sells – but several of those were just reiterations of old ratings that included higher price targets than before.

• Market value: $14.0 billion
• Dividend yield: 4.1%
• Centerpoint Energy (CNP, $27.94) owns regulated utility businesses in eight states and has an energy footprint in nearly 40 states. The company supplies electricity and natural gas to more than 7 million customers across Arkansas, Indiana, Louisiana, Minnesota, Mississippi, Ohio, Oklahoma and Texas. In addition to utility operations, Centerpoint Energy holds a 53.8% stake in Enable Midstream Partners LP (ENBL), which owns natural gas and crude oil infrastructure assets.

Centerpoint Energy expanded the scale of its utility operations last year when it spent $6 billion to acquire Vectren, a natural gas supplier to more than 1.0 million customers across Indiana and Ohio. Vectren also has non-utility operations consisting of pipeline repair and replacement services and renewable energy project development. Although these non-utility operations contribute only 25% of Centerpoint Energy's earnings, the steady cash generated from these businesses provides CNP with ample capital for funding utility-segment growth.

Again, Centerpoint is a utility, so don't expect striking growth. The company is targeting modest 5% to 7% annual increases in adjusted EPS through 2023, which should fund future dividend improvements. That's what the sector is good for: producing high-yield dividend stocks with routinely growing payouts. CNP has hiked its dividend for 14 consecutive years, with yearly rate bumps averaging about 4% over the past half-decade.

Goldman Sachs analyst Insoo Kim put CNP on the firm's 2019 Americas Conviction List earlier this year. Kim thinks the company is in the early stages of a turnaround and can produce nearly 7% annual EPS growth through 2021, fueled by the strength of its expanding regulated utility business.

• Market value: $245.3 billion
• Dividend yield: 4.2%
• Verizon Communications (VZ, $59.32) already operates America's largest 4G wireless network and is aggressively rolling out 5G in 30 U.S. cities this year. The company plans to re-energize revenue growth by creating a high-quality 5G network that can command premium pricing. Subscribers will be able to boost video download speeds tenfold on its 5G network, and businesses should be able to deploy new wireless applications in manufacturing automation, cloud retrieval and storage, autonomous vehicles, drones and healthcare.

Verizon's earnings improved 26% in 2018, reflecting the benefits of tax cuts and accounting changes. However, 2019 forecasts are closer to what you can expect out of a company operating in the oversaturated U.S. telecom market. Analysts expect just 0.6% revenue growth in 2019, and 2.5% profit growth. 2020 forecasts aren't much better. In fact, Verizon doesn't anticipate any meaningful revenue contribution from 5G services until 2021.

The flip side? Cellular and data service is practically a utility at this point, which helps Verizon produce gushers of cash that it uses to fund a large, modestly growing dividend. VZ's payout has expanded by a little more than 2% annually.

The pending merger between T-Mobile (TMUS) and Sprint (S) might threaten Verizon's margins – so worries Citi analyst Michael Rollins, who recently downgraded his VZ stock rating to Neutral (equivalent of Hold). But Oppenheimer's Tim Horan thinks Verizon eventually win out because of its early lead in 5G – among the reasons he upgraded the stock to Outperform in August.

• Market value: $2.8 billion
• Dividend yield: 4.2%
• Ryder System (R, $53.45) is a leader in transportation logistics. It provides truck rentals and leasing, used vehicles for sale and last-mile delivery services nationwide. The company owns a fleet of more than 272,000 vehicles, has over 800 locations across North America for vehicle rentals and maintenance and controls more than 55 million square feet of warehouse space used by its freight logistics business.

Most important for investors worried about dividend stability: 86% of revenues come from predictable long-term leasing contracts. And contractual revenue growth is expected to grow between 5% and 11% across Ryder's three divisions.

Ryder's core business, fleet leasing and maintenance, accounts for 60% of annual revenues. The company is also diversifying into additional business areas such as vehicle financing and support, managing outside carriers and warehousing and last mile logistics.

Ryder is focused on reducing headwinds from lower used-vehicle prices and rising maintenance costs. The company is boosting revenues with acquisitions and new services, trimming the average age of its truck fleet and cutting $75 million from maintenance costs. These initiatives helped 2018 EPS jump by 32% and nearly doubled the company's free cash flow.

While the company still is growing – its revenues through the first nine months of 2019 have improved 8% year-over-year to $6.6 billion – lousy market conditions for power vehicles have put a dent into earnings. Ryder has been forced to downgrade its full-year outlook in each of the past two quarters. While the company had expected $6.05 to $6.35 per share as of Q1, it now expects just 20 to 30 cents per share for 2019.

As ugly as all this sounds, investors have taken it in stride – Ryder's stock has actually improved by 15% so far this year. And the silver lining? "Although these changes in estimates significantly affect earnings in 2019 and 2020 — with the largest negative effect reflected in the third quarter of 2019 — we expect this impact to decline each quarter going forward," CEO Robert Sanchez said in the third-quarter release. Translation: This too shall pass.

Ryder also prioritizes its dividend. This high-yield dividend stock has paid out investors for 43 consecutive years, and improved the cash distribution for 15 consecutive years. That includes a 4% upgrade announced in July, despite its issues.

• Market value: $63.9 billion
• Dividend yield: 4.3%
• Duke Energy (DUK, $87.59) operates electric and gas utilities across the Southeast and Midwest. The company's regulated electric utilities have 51,000 megawatts of electric generating capacity. Non-regulated wind and solar assets contribute another 3,000 megawatts of capacity. Duke provides electricity to 7.7 million retail customers across six states and distributes natural gas to more than 1.5 million consumers across four states.

Duke's adjusted earnings per share have climbed by 8% through the first nine months of 2019, fueled by rate increases and unusually hot weather. That's actually exceeding its own internal expectations for 4% to 6% sustainable annual EPS growth through 2023.

Duke's utility operations, which contribute 85% of earnings, are benefiting from a continued population migration to the Southeast. The company recently invested $1.1 billion in its Florida electric grid, which Duke will begin recovering through rate increases this year. The company also is spending $500 million annually to upgrade its grid in the Midwest and construct electric vehicle charging stations in the Carolinas.

In its gas utility business (9% of EPS), construction is scheduled to resume on the 600-mile Atlantic Coast Pipeline, which is expected to commence full service in 2021. Duke is a partner on the Atlantic Coast Pipeline.

Duke Energy is one of the longest-paying high-yield dividend stocks on the market, with a regular payout that has endured for more than 90 years. Its dividend growth streak is much fresher, however at just 12 years. The cash distribution accounts for a high 80% of earnings, but that's typical for a utility. So is the slow, 3.5% annual growth rate on DUK's quarterly dole.

• Market value: $37.5 billion
• Dividend yield: 4.3%
• Prudential Financial (PRU, $93.31) offers life insurance, annuities and a variety of retirement-related products to customers worldwide. The company manages more than $1 trillion in assets and has offices in the U.S., Asia, Europe and Latin America.

Prudential is adding direct-to-consumer sales channels to its mix this year by acquiring Assurance IQ for $2.35 billion. Assurance IQ has technology that allows customers to shop for customized life, health, Medicare and auto insurance via the Internet and make the purchase online or through an agent. Tapping direct-to-consumer channels significantly expands Prudential's addressable market. The company expects the acquisition to be accretive to profits starting in 2020 and create $50 million to $100 million in annual cost savings.

PRU shares might struggle in the short-term. Citi analyst Suneet Kamath downgraded his PRU rating to Neutral (equivalent of Hold) in August. He wrote that the company's high-quality business mix can deliver superior EPS growth over the long-term, but that he believes near-term growth will be muted due to lower interest rates and recession uncertainties. Indeed, the company's Q3 report delivered in early November saw modest profit growth of 2% year-over-year, versus the company's average 8% compound annual growth over the past half-decade, sparking a pair of analyst downgrades.

That said, Prudential did enjoy 11% growth in the account values of its American retirement institutional investment products, to a record $218 billion. It also recorded strong sales growth in its U.S. Annuities and Life offerings, as well as international Life Planner.

PRU bought back $1 billion of its own shares in the third quarter, too, doubling its year-to-date total to $2 billion. It also spent more than $1.2 billion on its dividend, which has improved every year for a decade – and at a brisk clip of 11.5% annually over the past five years. That has helped secure its place among the higher-yielding dividend stocks in the financial sector.

• Market value: $32.2 billion
• Dividend yield: 4.4%
• LyondellBasell (LYB, $96.58) is one of the world's largest plastics, chemicals and refining companies. It is the leading producer of polymer compounds used to make plastics, and the largest licensor of polyolefin technologies to chemical and plastics companies. The company has manufacturing operations in 24 countries and records sales in more than 100.

LyondellBassell became the world's largest plastics compounder by acquiring A. Schulman for $2.3 billion in 2018. It's currently building the world's largest PO/TBA plant – propylene oxide (PO) is used to make bedding, while tertiary butyl alcohol (TBA) can be used to produce high-octane fuel. In addition, the company is building the first world-class high-density polyethylene (HDPE) plant in the U.S. and recently began operating a joint venture that produces recycled HDPE and polypropylene (PP).

The company walked away from a proposed takeover of Brazilian plastics and petrochemical producer Braskem (BAK) in July, opting instead to repurchase 35.1 million (roughly 9%) of its own shares. More recently, LyondellBassell entered into an agreement to construct a large petrochemical complex in China, committing to invest $12 billion across the next decade in various petrochemical projects.

Wall Street analysts have downgraded most chemical stocks, including LYB, due to expectations of a cyclical downturn in global chemical demand. That said, several analysts upgraded their price targets on LYB following a strong third-quarter report. The dividend stock has been enjoying insider buying, too. CEO Bhavesh Patel purchased $500,000 of shares in August, and beneficial owner AI Investments acquired nearly $50 million of LYB stock in early September.

LyondellBassell raised its dividend 5% during the June quarter, marking its 11th dividend increase in eight years. Dividends have grown five years in a row, at an 8% compounded annual rate.

• Market value: $65.6 billion
• Dividend yield: 4.6%

Dominion Energy (D, $79.72) is one of the nation’s largest suppliers of electricity and natural gas to consumers. The company owns $100 billion of assets and serves nearly 7.5 million customers across 18 states. Dominion operates regulated utilities in three states (Virginia, North Carolina and Utah) that are considered among the top five states for business growth in 2019.

The company shifted its business mix toward more regulated and fee-based services by paying $14.6 billion to acquire regional utility Scana Group last year. Scana supplies electricity to approximately 1.6 million customers across the Carolinas, but had been struggling financially due to a recently failed nuclear project. The merger left Dominion with $36.6 billion of long-term debt.

Dominion’s operations in 2019 should end up looking pretty typical for a utility. Based on the midpoint of its fourth-quarter guidance, the company likely will post operating profits of $4.22 per share, up a little more than 4% from the previous year.

Dominion has raised its payout for 16 years in a row, at an average annual compounded clip of more than 7% over the past half-decade. That said, given capital spending (budgeted at $26 billion over the next five years), debt repayment and managing its dividend payout ratio, which has climbed to nearly 90%, future dividend expansion might be slower. Analysts expect the company’s dividend growth rate to pull back to 2.5% in 2020 and remain there for several years.

• Market value: $120.1 billion
• Dividend yield: 4.8%
• International Business Machines (IBM, $135.59) plans to return to top-line growth by expanding in higher valued-added businesses, led by its Cloud and Cognitive Software and Global Business Services segments.

The company greatly expanded its hybrid cloud presence in July when it closed its $34 billion buyout of Red Hat. Red Hat develops open source software that enables companies to update older software applications and manage their data across both data centers and cloud providers. The acquisition makes IBM more competitive with cloud market rivals such as Microsoft (MSFT) and Amazon.com (AMZN). In addition, its new capabilities may help IBM attract bigger corporate clients that already rely on hybrid cloud strategies to sort, secure and analyze data.

Of course, for now, the top line still is receding. Again. Not long after snapping a 22-quarter streak of revenue declines, IBM began a new slump – one that was extended to five consecutive quarters after IBM's October Q3 report. However, while overall revenues declined by 4% year-over-year, Red Hat sales jumped by 19%, and cloud revenues were 11% better.

Instinet analyst Jeffrey Kvaal wasn't blown away by the overall results, but was happy about where IBM did show strength. "While we would prefer broader outperformance, if given the choice, we will take the one with the higher multiple (Red Hat)." Wedbush analyst Moshe Katri still is looking for the switch to flip. "The bottom line, IBM's massive $34 billion acquisition of Red Had (has) yet to provide a positive catalyst/trigger for IBM's overall top line growth."

The dividend remains a strong point, however. IBM has paid investors on a regular basis since 1916, and its 24-year streak of dividend growth puts it a year away from Dividend Aristocracy. Moreover, its payout ratio of 74%, while not leaving a ton of room for improvement, is plenty of cushion to consider the dividend safe. And at a yield of almost 5%, IBM is among the most generous high-yield dividend stocks in the Dow.

So while IBM's growth prospects are muddy, it can provide plenty of income while investors wait for a spark.

• Market value: $14.5 billion
• Dividend yield: 4.9%
• W.P. Carey (WPC, $83.91) is a net-lease commercial real estate investment trust (REIT) that invests in single-tenant properties, such as U-Haul self-storage facilities, Marriott (MAR) hotels and Hellweg stores in Germany (think Home Depot or Lowe's). The company is diversified both geographically, with 36% of rents generated overseas, and by property types, spanning office, industrial, warehouse and retail.

Rent escalators built into its long-term leases ensure rental income growth that keeps pace with inflation.

At present, W.P. Carey's portfolio consists of roughly 1,200 properties encompassing 137.5 million square feet leased out to more than 320 tenants. The REIT's average lease term is more than a decade, and portfolio occupancy is a high 98.4%, which was 20 basis points better than it was in the previous quarter. (A basis point is one one-hundredth of a percent.)

WPC shares have mostly rolled in 2019, piling up 30% gains, but that was much better before third-quarter earnings clipped its wings. The company's adjusted funds from operations (FFO, an important REIT profitability metric) dropped by 12% year-over-year, though it was still ahead of estimates. But W.P. Carey also lowered the high end of its full-year adjusted FFO. Still, the small analyst community that follows the stock was more encouraged than not. BMO Capital's Jeremy Metz stuck with his Outperform rating and Evercore ISI's Sheila McGrath upgraded the stock from Underperform (equivalent of Sell) to In Line (equivalent of Hold).

W.P. Carey has elevated its annual dividend for 22 years in a row and generally raises payments by a small amount every quarter. The annualized payout growth is fairly glacial, though, coming in at about 2% on average over the past half-decade.

• Market value: $293.5 billion
• Dividend yield: 5.0%

Integrated energy giant Exxon Mobil (XOM, $69.37) is, like Chevron, well-positioned over the long-term in the Permian Basin, with Permian production expected to rise from 274,000 barrels per day presently to 1 million barrels per day by 2024. The company also owns significant offshore discoveries in Guyana and Brazil that are expected to supply continuous strong production gains for years to come.

Despite rising production, however – the Permian Basin shined in Q3, with production jumping 7% – slumping oil prices and higher costs gouged earnings by almost half. That said, Exxon's $65.05 billion in revenues and 75 cents per share in earnings did manage to top analyst estimates.

The company is making progress, however, on its plan to double its cash flows by 2025. "We believe ExxonMobil is poised for a relative recovery after several years of lagging performance," writes BofA Merrill Lynch analyst Doug Leggate, who has a Buy rating on XOM shares. "We continue to believe XOM's strategy of investing counter to the industry cycle is reloading growth opportunities at advantaged costs, creating capacity for ratable dividend growth."

Indeed, despite a cyclical EPS performance caused by energy price swings, Exxon Mobil has been a steady generator of dividends. The company has delivered 37 consecutive years of dividend gains, which includes a 6.1% bump in April – a little ahead of its five-year pace of about 4.8% annually.

Many analysts are on the sidelines, with Hold-equivalent calls. For instance, Barclays analyst Jeanine Wai wrote in August that "investors are more likely to gravitate toward energy companies that currently have strong free cash flow generation, as opposed to potential free cash flow in the future." But the future should be fine for buy-and-holders, as she says the high-yield dividend stock's "counter-cyclical approach will eventually pay off for shareholders."

• Market value: $1.3 billion
• Dividend yield: 5.8%
• Universal Corp. (UVV, $52.76) is the world's leading supplier of leaf tobacco, serving customers in more than 30 countries. The company doesn't actually produce cigarettes or other consumer tobacco products – it acts as an intermediary between farmers and product manufacturers such as Altria Group (MO), Philip Morris International (PM) and British American Tobacco (BTI).

Demand for tobacco products is gradually declining, so Universal is exploring growth opportunities in adjacent industries while using its robust cash flow to increase dividends and reduce debt. Universal plans to invest in non-commodity agricultural products that can leverage its farming expertise and worldwide logistics network. But cannabis, for now, is out of the conversation, with the company citing regulatory uncertainties.

Universal expects non-tobacco businesses to represent 10% to 20% of its revenues within five years. That initiative should provide assurance to income investors looking to stick around UVV for the long haul.

This year's results have been impacted by a plethora of issues: declining demand, trade tariffs that reduced tobacco sales to Chinese customers and larger crops. But broadly speaking, the company's revenues and profits are stable, albeit in very slight decline.

Universal has nonetheless kept the pedal down on its quarterly dividend, improving it for 49 consecutive years – were it in the S&P 500, one more payout hike would put it among the Dividend Kings. The dividend has grown by a healthy 8.3% compounded average annual rate over the past half-decade, though most of that came with a massive jump from 55 cents to 75 cents per share in 2018.

• Market value: $1.5 billion
• Dividend yield: 8.9%

The largest payout among these high-yield dividend stocks belongs to Tanger Factory Outlet Centers (SKT, $15.88), a retail REIT that owns 39 factory outlet centers across 20 U.S. states and Canada. Its centers are leased to more than 500 brand-name companies, which together operate more than 2,800 stores. The company's tenants include the likes of Ralph Lauren (RL), Nike (NKE), Brooks Brothers and Le Creuset. More than 181 million shoppers visit a Tanger outlet center each year.

SKT hasn't been immune to the woes in rick-and-mortar retail. The stock has lost more than half its value over the past three years. While its funds from operations have held up for most of that time, they have pulled back in 2019 after it sold off some assets and suffered from the bankruptcy of tenant Dressbarn.

That said, Dressbarn stores accounted for only 1.7% of the REIT's annualized rents, and its store sales were only $140 per square foot – roughly a third the average for its other tenants. Replacing Dressbarn with another, better tenant might end up being a longer-term gain for Tanger.

The bright spot for Tanger is that its occupancy remains high, in the 95%-96%, which clobbers most other mall-related REITs. And sales per square foot for the 12 months ended Sept. 30 were $395, up from $383 from the prior-year period. While Tanger's adjusted FFO will decline during the current fiscal year, the company did raise its full-year guidance in its most recent quarterly report.

Part of Tanger's success comes from its TangerClub rewards program, which provides frequent customers with special offers, VIP parking and other perks. Members pay to join the program, which has attracted 1.4 million members and is growing 12% a year. These members average a trip to Tanger outlet centers every month and spend 63% more than non-club members.

As far as the dividend goes? The payout has increased every single year since SKT went public in May 1993, and at a decent clip of 8% annually over the past five years. 2019's bump-up was lean, however, at around 2%.

Certain sectors of the stock market have gained a reputation for being income-friendly. If you want dividends, you know to look at utilities, consumer staples and real estate investment trusts (REITs). Energy stocks – which include numerous high yielders – aren’t always first to mind, however.

Why? Energy stocks – which are tied to energy prices, which are tied not just to supply and demand, but also politics and currency strength, can be volatile over the short-term. Weak oil, natural gas and other commodity prices made energy stocks grossly underperform the market in 2014-15, for instance, but recoveries stoke outperformance like what we’re seeing so far in 2019.

Dividend investors should consider the opportunity in the energy sector right now. For one, West Texas Intermediate crude oil currently is near the $65-per-barrel mark, well off its recent low of $49 in December. Higher prices mean higher revenues – and oil companies, which were forced to improve their operations to squeeze more profits out of low oil prices, are generating even better earnings and cash from those revenues. Greater profitability naturally encourages investors to drive share prices higher, and that cash is used to fund generous and sometimes growing payouts.

Also, many integrated oil companies as well as dedicated exploration and production firms are being prudent about their capital expenditures, instead budgeting with an eye toward generating cash and funding dividends from existing projects.

Here are 10 energy stocks and funds to buy for a 1-2 combo of dividends and growth. These picks vary in their balance – some are slow-moving high yielders, some are growthy plays with modest yields and some fall squarely in between.

Data is as of April 7, 2019. Dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price.

• Market value: $240.2 billion
• Dividend yield: 3.8%
• Chevron (CVX, $162.42) is one of the world’s largest integrated oil majors – which means it’s involved in every step of the process, from finding energy sources to delivering refined products to end customers.

Chevron’s recent history shows a clear priority of dividends over stock buybacks. When plunging oil prices cramped the energy sector in 2014-15, Chevron suspended its share repurchases and didn’t resume until 2018. Meanwhile, even as pundits questioned whether CVX’s dividend was safe, the company continued its decades-long streak of payout increases – it remains a Dividend Aristocrat, with 32 consecutive years of annual dividend hikes.

Roughly 58% of the company’s earnings go toward funding the dividend, which means the payout is quite sustainable. But naturally, because profits fluctuate with oil prices, so too does that ratio – so sometimes, it can feel like Chevron is just getting by.

Chevron’s capital expenditures have contracted significantly, from $38 billion in 2013 to $13.8 billion in 2018. It will increase that figure to $20 billion in 2019, but Chevron management clearly sees a priority in not overextending itself.

Morgan Stanley analysts started CVX shares at “Overweight” (equivalent of “Buy”) at the start of April, citing Chevron’s focus on generating strong cash flow and writing that “cash flow drives stock performance in Big Oil.”

• Market value: $36.2 billion
• Dividend yield: 4.3%

Refiner Valero (VLO, $86.69) is another generous yielder that hovers around (in this case, above) the 4% mark.

Valero – the world’s largest independent petroleum refiner – owns and operates 16 refineries across the U.S., Canada and Wales. Whereas exploration and production companies tend to simply become more profitable as oil prices rise, refiners like Valero are a bit more complicated. Oil refiners make money off the “crack spread” – basically, the difference between the cost of buying the oil, and what price they can get for the refined product (say, gasoline).

Valero, unlike Chevron, did have to cut its dividend in relatively recent history (2010). However, it has been much more aggressive about growing it in the aftermath. The payout has more than doubled during the past five years, from 40 cents to 90 cents. That includes a 12.5% dividend increase announced in January of this year.

Morningstar analyst Allen Good thinks the refiner made the right moves years ago to position itself well for today. “We think Valero moved deftly to capitalize on the downturn in 2008-09 by divesting underperforming assets and adding strategic assets cheaply to high-grade the overall portfolio, which should lead to higher returns,” he writes. “Adding ethanol facilities out of bankruptcy should allow Valero to lower costs and position itself for government mandates that appear to be here to stay.”

Also in January, Valero completed the acquisition of its affiliated master limited partnership (MLP), pipeline operator Valero Energy Partners. That follows a string of similar moves throughout the energy sector of parent companies merging with their MLPs – a response to a change in federal tax law that knocked out a key benefit for these partnerships.

• Market value: $349.3 billion
• Dividend yield: 4.0%

Rather than restraining capital expenditures and increasing dividends to shareholders, as other major integrated oils have been under pressure by investors to do, Exxon Mobil (XOM, $82.49) – one of the largest integrated oil majors in the world – is accelerating its capex.

Exxon has a plan to drive profits from $15 billion in 2017 to $31 billion by 2025, as well as improve return on invested capital from 7% in 2017 to 15% by 2025. Under this plan, XOM would spend $24 billion on capital projects this year, $28 billion next year and an average of $30 billion from 2023 to 2025. This plan stands in stark contrast to many of Exxon’s other peers.

That shouldn’t worry income investors, however. A Bank of America analysis finds that Exxon Mobil can fund its expansion while still funding (and increasing) its dividend.

Exxon certainly cares about consistently raising its payout. Like Chevron, Exxon Mobil is a Dividend Aristocrat, boasting 36 years of consecutive annual increases.

• Market value: $5.0 billion
• Dividend yield: 3.4%

Global exploration and production company Murphy Oil (MUR, $28.89) finally buckled under pressure in 2016. After years of dividend growth, it actually made a cut to its payout – from 35 cents per share to 25 cents, where the dividend has been stuck ever since. The silver lining is that the cut was less drastic than what several other energy stocks had to execute: ConocoPhillips (COP), for instance, hacked its payout by two-thirds in 2016.

However, even after Murphy’s reduction, shares still yield well more than 3% at current prices. That dividend cut also helped Murphy shore up its financials. In December 2018, for instance, Murphy’s upgraded the company’s debt from Ba3 to Ba2 – still on the high end of “junk,” but a step closer to investment-grade.

Standard & Poor’s/CFRA notes that even at the high end of management’s guidance range of $1.3 billion to $1.5 billion in capital expenditures, Murphy is likely to generate “meaningful” free cash flow and is well-positioned to continue funding its dividend at current levels.

• Market value: $50.9 billion
• Dividend yield: 4.7%

E&P giant Occidental Petroleum (OXY, $68.04) has in recent years sold less-valuable assets and used the proceeds to invest in higher-return projects in the Permian Basin, located in west Texas and southeastern New Mexico.

That should help growth in the long-term, though Oppenheimer analyst Tim Rezvan, who has shares at “Hold,” says that story might need a little time to play out – though investors will collect a considerable sum of income to wait.

“Occidental will focus growth on its workhorse Permian asset (24% growth CAGR through 2022), and we see long-term international catalysts, but nothing near term to increase the ~2% dividend growth CAGR since 2015,” he writes. “We believe the 4.8% dividend yield sets a floor for OXY shares at $60, but we see shares rangebound as the next stages of upstream growth unfold.”

Wells Fargo analysts like Occidental’s strong balance sheet and its production levels in one of the top shale fields in Permian Basin. They also believe OXY can continue increasing its dividend payments – something it has already done for 16 consecutive years.

• Market value: $20.8 billion
• Distribution yield: 5.6%*
• Cheniere Energy Partners LP (CQP, $42.11) is an MLP that deals in liquefied natural gas (LNG) terminals and natural gas pipelines. Its facilities include the Sabine Pass LNG terminal near the Gulf of Mexico, as well as the Creole Trail Pipeline in Louisiana. Revenue has soared in the wake of the Sabine Pass’ opening in 2016, and expansion in 2017 and 2018.

Companies such as CQP – which was formed by LNG company Cheniere Energy (LNG) in 2006 – tend to be a little more insulated from energy-price fluctuations because they don’t make money by selling the product – instead, it’s based off the amount of product that flows through their facilities. Think of it as a toll taker of sorts.

Natural gas exports have increased dramatically over the past two years, and thanks to the shale revolution (e.g., fracking and horizontal drilling), this trend appears likely to continue. Driven by these tailwinds, Cheniere Energy Partners LP should continue to generate large (and growing) cash distributions over the next several years. While the company’s payout remained fixed at 43 cents quarterly for roughly its first decade of operations, the payout inched ahead to 44 cents at the end of 2017 … and has grown every quarter since, to a current 59 cents.

Further, Cheniere has plans to expand. The company’s Corpus Christi liquefaction facility’s first “train” produced its first LNG in November 2018. The second train will reach “substantial completion” in the back half of this year, followed by a third train to be completed by the second half of 2021.

* Distributions are similar to dividends but are treated as tax-deferred returns of capital and require different paperwork come tax time.

• Market value: $7.0 billion
• Distribution yield: 8.0%
• Tallgrass Energy LP (TGE, $24.81) is a mid-cap MLP that transports crude oil and natural gas from the Rockies, Midwest and Appalachian regions. Its operations span 8,300 miles of natural gas pipeline and more than 800 miles of crude pipeline – as well as 300-plus miles of water pipeline.

The company – which since inception in 2012 has already split into MLP and general partner, then merged back – has grown its distribution every quarter since mid-2015, from 7.3 cents per share at the time to a current 51 cents. But the company isn’t stretching to meet its obligations; in fact, its debt was assigned an investment-worthy credit rating by Fitch in September 2018.

But Tallgrass Energy also has significant growth prospects. Its expansion plans include a joint venture with pipeline behemoth Kinder Morgan (KMI) to increase pipeline capacity in the Rockies, as well as projects designed to transport crude to export facilities.

• Market value: $13.8 billion
• Yield: 3.1%*
• Expenses: 0.13%

Investors wanting to make a broader bet on the energy sector across more than one or two stocks may want to consider an exchange-traded funds (ETFs).

The first one we’ll cover is the Energy Select Sector SPDR Fund (XLE, $67.71), the largest ETF (by assets under management) dedicated to energy stocks.

The XLE provides investors access to numerous energy industries, including E&P, refining, marketing, and even equipment and services firms. It also holds many of the stocks we’ve highlighted – Exxon Mobil, Chevron, Occidental and Valero are all top-10 holdings.

Just understand that XOM and CVX both hold significant sway on this fund – they combine to command 42% of the fund’s assets, which means big gains or losses in those two firms will say a lot about how XLE performs.

Still, this 29-stock fund is a more diversified bet than buying just a couple of the sector’s companies. And despite XLE’s problems during the 2014-15 energy swoon, Morningstar still has given it a five-star rating over the trailing five- and 10-year periods for its high total returns and low risk.

* Dividend yield represents the trailing 12-month yield, which is a standard measure for equity funds.

• Market value: $208.6 million
• Yield: 2.4%
• Expenses: 0.47%

Investors who wish to avoid investing in fossil-fuel producers could consider the iShares Global Clean Energy (ICLN, $10.10) ETF, which invests entirely in companies that deal in renewable sources of energy, such as solar and wind.

When U.S. investors typically think of “green” stocks, they often think of solar stocks such as First Solar that don’t deliver dividends. However, ICLN is heavily international in nature, and several foreign green-energy companies do return cash to shareholders. A little more than one-third of this 31-stock portfolio is in American stocks – another 22% is invested in China, 10.4% in New Zealand and 8% in Brazil, with smaller amounts dedicated to a handful of other countries.

Top holdings include Spain’s Siemens Gamesa Renewable Energy (GCTAY), Denmark’s Vestas Wind Systems (VWDRY) and Brazil’s Companhia Energetica Minas Gerais (CIG).

• Market value: $2.1 billion
• Yield: 0.9%
• Expenses: 0.35%

The final ETF certainly leans much more heavily toward growth than income, and it in fact boasts the thinnest yield on this list. But it’s still worth a look.

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP, $31.81) is an industry ETF that focuses on a small, specific subset of energy stocks – E&P players. Unlike stocks such as Exxon Mobil and Chevron that have their hands across various “streams” of the energy chain, XOP invests in companies that are focused solely on upstream – exploring for assets and then tapping them to produce oil and natural gas.

Because of this industry’s reliance on commodity prices – as well as a relatively modest median market cap of about $2.7 billion – this fund can swing strongly on changes in prices of crude and nat gas.

But this is a broader portfolio than the previous two funds; XOP invests in more than 60 stocks. Top holdings include California Resources (CRC), Whiting Petroleum (WLL) and Oasis Petroleum (OAS).

Energy stocks have had a difficult 2018. Mostly flat performance through most of the year turned into a tailspin in October as oil prices plunged from above $75 per barrel to below $50. That in turn has pinched oil companies that rely on elevated commodity prices to drive larger profits.

The headwinds are clear. Demand has slowed to a crawl, and supplies have piled up despite production cuts from several nations. Fears about U.S.-China trade relations have weighed, as have worries about sanctions on Iran.

It’s no wonder why energy stocks have taken it on the chin.

But the skies are starting to clear as we head into 2019. OPEC and other nations are beginning to discuss additional output curbs, and with U.S. shale producers running at full capacity, there really isn’t much room for them to pick up any slack. The U.S. and China have made progress on trade talks, too, including a 90-day moratorium on increasing tariffs.

Investors diving into the sector still need to be choosy. A rebound in oil is far from a certainty, which means it’s necessary to put a premium on quality right now. Here, we look at the 10 best energy stocks to buy for 2019 – those that can best take advantage of the current energy environment.

Data is as of Dec. 3, 2018. Dividend yields are calculated by annualizing the most recent quarterly payout and dividing by the share price.

• Market value: $340.8 billion
• Dividend yield: 4.1%

Most lists of energy stocks at any time include the biggest American player in the space: Exxon Mobil (XOM, $79.50). But Exxon hasn’t really felt like the king of late.

Believe it or not, Exxon is starting to fall behind some of its rivals in terms of reporting lower year-over-year production figures, and in terms of stock returns. That’s what makes the current oil-price environment so interesting for the integrated energy giant.

When oil prices crashed a few years ago, Exxon clamped down on capital expenses, reducing its capex by 25% to under $23 billion. It also ended its lucrative buyback program to preserve cash. The result of these moves was a clip in production; for instance, at the start of Q1 2018, total oil and gas production decreased 6% year-over-year. At the same time, rivals who kept the spigots going now have projects that are starting to gush.

But Exxon has a new plan. The energy major will push its capital spending from $24 billion in 2018 to $28 billion in 2019, and eventually get up to an average of about $30 billion between 2023 and 2025. Much of this will be focused on high-margin areas such as the Permian Basin or new prolific fields such as offshore operations in Guyana. Upside from the Permian already started to show up for Exxon in 2018, and Guyana should significantly improve its production within the company’s official target of five years.

Patient investors waiting for Exxon to realize its long-term potential will be paid a hefty 4% annually in dividends just to wait

• Market value: $230.1 billion
• Dividend yield: 3.8%
• Chevron (CVX, $118.94) is another Big Oil stock that has been thinking smaller of late. The oil rout of 2014-15 constricted the company’s cash flows and production figures, and ultimately led to questions about the company’s dividend. While CVX ultimately never cut it, Chevron did leave the quarterly dividend flat in 2015, only raised it 1 cent in 2016, then kept it flat again in 2017.

The foot-dragging was a necessity, as Chevron was being forced to lean heavily on asset sales and its balance sheet to fund capex spending and its dividend.

But now, Chevron’s benefitting from its lean-time strategy. Several big-name projects have come online to produce both crude oil and natural gas. Its Wheatstone and Gorgon liquefied natural gas (LNG) facilities are finally up and running, while several new fields in the Permian and in the Gulf are pumping out crude. In its Q3 report, Chevron announced a record quarterly production figure of 2.96 million barrels per day. This prompted an upgrade from Credit Suisse, which said CVX “continues to execute on its already superior growth outlook.”

Chevron is now pulling back on its capex spending to about $19 billion – down from the $25 billion to $30 billion it has spent over the past few years. That should pad the bottom line, giving the dividend a little more breathing room to grow.

• Market value: $53.5 billion
• Dividend yield: 4.4%
• Occidental Petroleum (OXY, $70.27) is a second-tier name in energy, but investors who pass it by on name recognition alone are losing out.

Occidental is considered a “mini-integrated” oil firm. It features plenty of up-, mid- and downstream assets, basically from wellhead to end user. It’s just not as huge as Exxon or Chevron, but neither is it a pure exploration-and-production player. It makes it more difficult for investors to evaluate.

But OXY could be a “Goldilocks” energy stock: not too big, not too small.

Occidental has long been a top producer in some low-cost regions. It owns 2.5 million net acres in the Permian Basin. Additionally, it has some major legacy assets in Qatar, Oman and the United Arab Emirates. This creates a very low-cost output profile that allows OXY to score big when oil prices rise. During its latest investor presentation, the company’s management should that its current cost structure should allow it cover CAPEX and increase its dividend with West Texas Intermediate oil – the primary American benchmark – at $50 per barrel.

On the flipside, Occidental’s refining assets focus more on chemical production rather than gasoline and fuels. Typically, chemicals and base-plastics have much higher margins than gas.

OXY has been able to generate five-year average free cash flows of around $1.2 billion, according to Morningstar data. This period includes the latest oil rout and shows that OXY’s mix of assets can keep it and investors afloat in most energy environments.

• Market value: $137.4 billion
• Dividend yield: 6.1%

The Deepwater Horizon and its aftermath hounded international integrated giant BP plc (BP, $40.35) and its stock for years. One of the worst oil spills in history resulted in billions of dollars in fines, fees, lawsuits and compensation. The total bill to date is just under $62 billion.

To pay that bill, BP cut spending, sold off billions of dollars’ worth of assets and created a script dividend program in which investors were able to receive payouts in additional shares rather than cash.

Finally, though, BP is starting to leave the Deepwater Horizon disaster behind. Once it makes a few final small settlement payments in 2019, it will be freed from the massive financial burden – just in time.

BP’s focus has necessarily been squeezing out as much profit per barrel as possible. The company earned $3.8 billion in its third quarter, for instance, more than doubling its profits from the year-ago period. That builds on two previous quarters of strong profits. Said CEO Bob Dudley, “We now have a base business that can balance itself at $49 a barrel.” That’s important considering the current environment in crude prices.

BP’s cash has now returned to levels where it can cover a real dividend, as well as expand its capex. That should propel the dividend stock in 2019.

• Market value: $62.0 billion
• Dividend yield: 0.9%
• EOG Resources (EOG, $103.31) was fracking before it was cool.

Years ago – as Enron Oil & Gas – EOG was one of the first movers into the “Big Three” shale fields: the Eagle Ford, Permian and Bakken. That allowed it to build out some of the largest, choicest drilling locations in each field. That first-mover status in turn has helped it realize great mechanics and efficiencies from its wells.

Thanks to EOG’s superior quality of reserves, the firm boasts one of the lowest breakeven costs in the business. According to its latest management presentation, EOG can still pull a 30% direct after-tax rate of return (ATROR) from WTI-benchmarked oil at $40 per barrel. It makes 100% when oil gets up to $60 per barrel.

EOG used the current energy-price malaise to secure roughly 65% of its future well costs today. EOG Resources COO Lloyd Helms said during the latest quarterly earnings call that the current negotiated structure for services provides the company with “a great deal of flexibility to adjust our activity level in 2019,” and that “by doing so, we expect to reduce total well cost again in 2019.” Helms predicts its drilling costs will fall another 5% next year.

And any dip in costs will only help the bottom line.

• Market value: $78.5 billion
• Dividend yield: 1.8%

Leading independent E&P company ConocoPhillips (COP, $66.18) has had to make several hard decisions over the past few years that are finally paying off.

Those hard decisions included a dividend cut in 2016. The 66% haircut to the payout, as well as capex cuts, have turned out to be godsend, however. Conoco was one of the first oil stocks to get “lean and mean,” focusing its now-lower capital spending on top shale fields and other promising plays. Shale fields such as Bakken, Eagle Ford, and Permian Basin have well mechanics with breakeven costs as low as $35 per barrel. Conoco quickly has become one of the top dogs in all three of those regions with more than 1.8 million total acres under its control.

This has helped the bottom line, with COP reporting a more-than-350% year-over-year surge in its most recent quarterly profits. The three aforementioned fields saw production jump by more than 48%.

As a result, COP has resumed buybacks and started growing its dividend once more. With its latest increase, Conoco’s payout has grown 22% since it was slashed in 2016. And ConocoPhillips can continue to function well in today’s low-price environment.

• Market value: $14.3 billion
• Dividend yield: 1.2%
• Marathon Oil (MRO, $16.69) once was an integrated giant that owned both production and refining assets. Just like Conoco, MRO sought to rid itself of those refining assets, which were slow-moving and money-losing at the time. But that spinoff seemed ill-timed; Marathon was left without any downstream assets that could have taken advantage of the lower oil prices from the 2014-15 crash.

Marathon didn’t have the size advantage Conoco did, however. As oil plunged, investors took shares to the woodshed. At one point, you could buy MRO shares for around the price of an Extra Value Meal. Fearing oil would stay lower for longer, Marathon cut its capex budget by more than 20% and reduced its dividend by more than three-quarters.

MRO pruned assets, too, including selling its Canadian oil sands holdings that, as CEO Lee Tillman put it, “represented about a third of our Company’s other operating and production expenses, yet only about 12 percent of our production volumes.” It instead focused its attention on the Permian, as well as the Bakken and Eagle Ford. Today, more than 70% of Marathon’s production comes from U.S. sources. These low-cost fields are allowing MRO to balance capex spending and dividends at just $50 per barrel of WTI crude.

Marathon offers a similar gains profile to COP in the current environment.

• Market value: $13.2 billion
• Dividend yield: 1.2%

If you haven’t heard of Devon Energy (DVN, $27.03), you’ll be glad to learn about it now.

Devon originally was a natural-gas-focused firm, which was fine until nat-gas prices – thanks to fracking’s efficiency – tanked hard in the late aughts. DVN shares were put on the backburner.

To counteract this, Devon management plowed into a variety of shale oil plays including the Eagle Ford, as well as Oklahoma’s “STACK” region, Delaware Basin and in the Rocky Mountains. It also sold natural gas assets. As a result, 63% of its production (as of the end of 2017) comes from crude oil and NGLs.

This has been a boon operationally. Devon recently reported a big profit beat and produced $807 million in operating cash flow during the quarter. This fully funded its drilling program with about $250 million left over.

DVN shares have chronically underperformed the rest of the sector, anyway. But Devon could be a sneaky play. The company has a $4 billion share repurchase program that should finish in early 2019 – a program that will reduce its outstanding common stock by about 20% in total.

• Market value: $27.6 billion
• Dividend yield: 2.0%

The current oil-price environment means Anadarko Petroleum (APC, $52.90) has a target on its back yet again.

If you were to take Exxon and break it apart, Anadarko would be the part that actually pulls out the oil – and it does so all over the world. So if you were an Exxon or a Chevron and needed expand your own production profile, you could move the needle by acquiring APC. Moreover, the recent rout in energy stocks has made Anadarko more affordable at less than $30 billion.

There are several other reasons to believe an energy giant might come to the table and eat. Anadarko has reduced its costs and increased its percentage of crude oil production thanks to shale. Its operations are so good that their breakeven points are in the $20- to $30-per-barrel range. Across all assets, APC sees incremental cash flows above $50 per barrel. And with Anadarko recently selling off its midstream assets, it looks more like a pure E&P player every day. That’s exactly what a company like Exxon might want.

Even if a buyout doesn’t happen, APC’s continued improvements have resulted in shrinking losses. Moreover, the company – which had to reduce its dividend from 27 cents quarterly to 5 cents in 2016 – restored it to 25 cents in 2018, and even raised it up to 30 cents.

• Market value: $2.8 billion
• Dividend yield: N/A
• Chesapeake Energy (CHK, $2.92) is the most aggressive play on this list, and in fact, you could call it a “lottery ticket” stock. In fact, at just less than $3 per share currently, it’s priced like one.

Chesapeake’s low price is a result of numerous missteps.

Chesapeake is one of the biggest shale drillers of natural gas in the U.S. But to gain its size, it binged on debt. At one point, it had more than $21 billion in IOUs to its name. That wrecked Chesapeake when natural gas and oil cratered in 2014-15. The firm went on an asset-selling spree to raise funds so it could still drill while reducing that huge burden. It did clip that net debt down to around $9.4 billion – not great considering its total shareholder equity is around $3.4 billion, but it is a marked improvement.

Cash is improving, too. Higher-margin oil now represents around 19% of production. That helped Chesapeake record more than $504 million in cash from operating activities last quarter. Continued moves into shale have management predicting that 30% of its production will come from oil in 2019.

CHK is improving. There’s still a lot of risk – most notably, that debt – but it has the potential to be one of the bigger-reward energy stocks to buy in 2019.

It’s been a strange year for high-yielding stocks. In the first half of 2016, the Dow Jones utility average, a proxy for hefty dividend payers, was a market leader, rising 26%. Since then, however, it has tumbled 6%. And it has been a notable laggard during the post-election rally, falling 1% since November 8, while the broad market, as measured by Standard & Poor’s 500-stock index, advanced 6%.

What’s a yield-seeking investor to think now, with a lot of hot money chasing stocks that should benefit from rising rates (such as financials) and faster economic growth (such as industrial manufacturers and producers of steel, copper and other materials)?

Portfolio managers suggest that in this environment it makes sense to invest in companies that should deliver both above-average dividend growth and above-average earnings. We analyzed the 65 stocks in the Dow Jones industrial, transportation and utility averages and came up with 10 that meet those criteria and should provide investors with solid returns. We focused on this universe because inclusion in one of the Dow averages is a testament to a company’s size and financial strength. The market capitalization of the smallest company on our list is $55.7 billion.

The stocks have an average yield of 2.7%, and all but one yield more than the average 2.1% yield of the S&P 500 index.

Our picks are listed in descending order of their dividend yield. All figures are as of December 20. Revenues are for the past 12 months. Price-earnings ratios are based on estimated year-ahead earnings, starting with the current quarter.

• Symbol: CVX
• Price: $117.95
• Market capitalization: $222.9 billion
• Annual revenues: $112 billion
• Estimated 2017 earnings growth: 313%
• Price-earnings ratio: 23
• Dividend yield: 3.7%

If you’re bullish on oil prices, Chevron is attractive, says Paul Franzen, a senior analyst with the Commerce Value Fund. And it looks much more appealing than ExxonMobil (XOM), the world’s biggest publicly traded energy company and also a member of the Dow Jones industrials.

Chevron should see annual production of oil and gas rise by 5% over the next three years, compared with 1% per year for Exxon. In addition, Exxon has a lot of exposure to refining and chemicals, which Chevron does not. That would be a relative plus for Chevron because rising crude prices pressure refining and chemical profits.

Chevron has a number of assets that should deliver solid returns with oil prices back in the $50-a-barrel area and perhaps heading higher. One particularly attractive holding is the roughly 2 million acres it owns in the Permian Basin in Texas and New Mexico, the second-largest oil field in the world. Analyst Pavel Molchanov of Raymond James thinks this holding could be worth $30 billion, or about 14% of the company’s market cap.

Beyond the Permian Basin, one of Chevron’s two huge liquefied natural gas facilities in Australia just went online, and the other one will go online soon. Another advantage for Chevron is that a relatively small amount of its assets are in global hot spots or politically unattractive locations. For instance, only 2% of its reserves are in the Middle East (compared with 13% for its competitors, other enormous multinational energy companies), and none are in Russia (compared with 12% for its rivals).

Don’t put too much stock in the 313% earnings growth that analysts expect Chevron to deliver next year. The figure is large because profits remained depressed in 2016 due to the recent crash in oil prices. By the same token, because of the profit slump, Chevron’s unappetizing price-earnings ratio is inflated by weak profits. Even during tough times, though, Chevron has been a generous dividend payer. It has boosted its payout by an average of 9% annually since 2005.

Ultimately, the price of oil will be the key driver of Chevron’s share price. Molchanov, who thinks oil will average $80 a barrel in 2017, compared with $52.40 today, says Chevron is more sensitive to crude prices than its main competitors. “It’s good to be oily,” he says.

See Also: 27 Best Stocks to Buy Now for 2017

• Symbol: CSCO
• Price: $30.56
• Market capitalization: $153.4 billion
• Annual revenues: $48.9 billion
• Estimated earnings growth in the fiscal year that ends in July 2017: 1.3%
• Price-earnings ratio: 13
• Dividend yield: 3.4%

The networking giant’s stock price is almost exactly where it was 10 years ago. Growth remains sluggish, with revenues having climbed just 1% in the first quarter of fiscal 2017 (ending in October) over the same period a year earlier.

Tax cuts favored by President-elect Donald Trump, including a lower corporate tax rate and a cut in taxes on profits repatriated from outside the U.S., would help Cisco, but there are other reasons to like the stock. Cisco is beginning to emerge as a network-security powerhouse. That business generated $2 billion in revenues in fiscal 2017, and security revenues rose 11% in the August-October quarter. Granted, many old tech companies, such as Microsoft (MSFT), are heralding their security chops, but Cisco’s annual haul is already bigger than that of Palo Alto Networks (PANW), the leading standalone security firm.

In the switching and router markets, meanwhile, Cisco is fighting against companies making hot new machines and others just trying to replicate Cisco’s offerings at a lower price. Cisco’s solution? It is trying to bundle software with its hardware and convince customers to pay for the software via an annual subscription payment. Overall, subscription revenues grew by 33% in the fiscal year that ended in July 2016, and Cisco now derives half of its security revenues from software or by subscription (the rest is from hardware sales). “The strategy is working,” says Jennifer Chang, manager of the Cullen High Dividend Equity Fund.

Chang thinks the company can deliver mid- to high-single-digit earnings growth over the next three to five years. “The dividend can grow even faster,” she says. In fact, Cisco in February raised its quarterly payout by an eye-popping 24%. And the stock looks cheap, selling for 30% less than the S&P 500’s P/E of 17.

• Symbol: NEE
• Price: $119.30
• Market capitalization: $55.7 billion
• Annual revenues: $16.5 billion
• Estimated 2017 earnings growth: 5.8%
• Price-earnings ratio: 19
• Dividend yield: 2.9%

Some people might think the election results precipitated a perfect storm for NextEra Energy. As a member of the Dow utility average, not only is the stock sensitive to interest rates—which have been rising since Election Day—the company is also the utility sector’s renewable-energy leader. And Trump seems to favor fossil fuels much more than renewable energy sources, such as wind and solar.

NextEra’s stock has fallen nearly 4%% since the election. But that may not be just an overreaction; instead, it may be a move in the wrong direction. Many of the tax credits that the company—and its customers—get for solar and wind projects will last through the end of 2019, then start to phase out, eventually disappearing at the end of 2022. And many wind and solar projects make economic sense without any tax credits at all.

In addition to serving fast-growing Florida, NextEra has grown by signing 20-year energy deals with industrial clients such as General Electric (GE). Many more agreements should follow. The company expects its earnings per share to rise by 6% to 8% a year through 2018, with dividends growing considerably faster, at an annual rate of 12% to 14%.

See Also: 8 Great Dividend-Paying Stocks in the Russell 2000 Index

• Symbol: JNJ
• Price: $115.66
• Market capitalization: $314.6 billion
• Annual revenues: $71.6 billion
• Estimated 2017 earnings growth: 5.2%
• Price-earnings ratio: 17
• Dividend yield: 2.8%

If you’re worried that drug prices might be subject to government price controls but still want to own a large pharmaceutical company, you’ll be hard-pressed to find a better choice than Johnson & Johnson. That’s because in J&J’s most recently reported quarter (July-September), the company derived only 47% of its sales from drugs. Medical devices accounted for 35%, and consumer products, such as Band-Aids, Listerine and Tylenol, were responsible for the rest.

And if you are looking for dividend growth and dependability, you need look no further. J&J has increased its annual payout for 53 consecutive years. A tax cut on repatriated earnings might help boost the payout further, given that almost all of the more than $40 billion in cash and securities on J&J’s balance sheet is held overseas.

With revenues and earnings expected to grow at a mid-single-digit rate over the next few years, it is reasonable to expect annual dividend growth of 6% to 8%. J&J has achieved $1 billion in productivity gains over the past three years. And in January, it announced that it would eliminate 3,000—or 6%—of the jobs in its medical-devices division.

Bears worry about the loss of J&J’s patent for the company’s top-selling drug, Remicade, a rheumatoid arthritis treatment that generates $6.6 billion in annual sales. After a judge invalidated the patent in August, Pfizer introduced a rival drug (called a biosimilar because it is made from biological components) in November. But Pfizer priced the drug only 15% lower than Remicade, less of a discount than investors initially feared. And J&J says that it has positioned itself to withstand the assault, noting that patients with commercial insurance pay just $5 per dose with a Remicade co-pay card (a discount card issued by the drug’s manufacturer) and that 48% of Remicade patients with commercial insurance have no co-pay whatsoever.

Analysts say J&J has a strong pipeline of drugs in development, so the company, which was founded 130 years ago, may have another century or two of growth ahead of it. And, who knows, it might raise its dividend annually for the next 53 years as well.

• Symbol: UPS
• Price: $117.52
• Market capitalization: $81.0 billion
• Annual revenues: $60.0 billion
• Estimated 2017 earnings growth: 5.2%
• Price-earnings ratio: 19.6
• Dividend yield: 2.7%

Known as Brown, for the color of its ubiquitous trucks and the uniforms of their drivers, UPS is a powerhouse not just in the U.S. Only three companies move packages internationally—FedEx (FDX) and DHL are the others—and UPS is by far the most efficient. Plus, overseas revenues are growing faster than in the U.S. From 2016 to 2019, the company expects revenues in the U.S. to rise by 5% to 6% a year, compared with international revenue growth of 6% to 9% annually. It expects earnings to increase by 9% to 13% annually.

Another plus for UPS: It pays a high federal corporate tax rate of 34% to 36%, so it could benefit from tax reform. “It is one of the reasons you could see profit-margin expansion,” says Matt Moulis, manager of the Fidelity Select Transportation Fund, which has UPS as its second-largest holding. Moreover, he says, “a significant portion of the business is recurring, including the shipment of staples and holiday gifts.”

Since going public in 1999, UPS, a member of the Dow transportation average, has lifted its dividend at a 10% annual pace. Expect that to continue.But what about future competition from Amazon, which has been buying cargo planes of late? So far, it seems the e-commerce giant is simply trying to find a way to make on-time deliveries at peak gift-giving times. Still, e-commerce now accounts for more than 40% of UPS business, and investors have to be alert to changes afoot at Amazon. But UPS has shown it can be flexible. To execute “not-at-home” deliveries, it has created 27,000 worldwide access points where customers can pick up their packages.

• Symbol: MSFT
• Price: $63.54
• Market capitalization: $494.3 billion
• Annual revenues: $85.4 billion
• Estimated 2017 earnings growth in the fiscal year that ends in June 2017: 1.1%
• Price-earnings ratio: 22
• Dividend yield: 2.5%

At Microsoft’s last shareholders meeting, in November, CEO Satya Nadella said that by 2025 the world will produce 180 zettabytes of data. (A zettabyte is sextillion bytes, or 10 to the 21st power bytes.) No wonder the world needs the cloud. And Microsoft’s mastery of the cloud is a big part of the company’s growth story. “Microsoft’s cloud is now competitive with Amazon Web Services,” says Ramona Persaud, manager of the Fidelity Dividend Growth Fund.

At the end of the fiscal year that ended June 30, Microsoft was generating cloud revenue at an annualized rate of more than $12 billion, an increase of slightly more than 50% from the previous year. Nadella says cloud revenue will reach $20 billion by the fiscal year that ends in June 2018. As the business expands, profit margins should improve.

Other parts of the business are also prospering and offsetting weak sales of operating systems and applications software for the stagnant personal computer market. Sales of the Surface tablet rose by 65% in fiscal 2016, to $3.6 billion; 49 million customers subscribe monthly to Xbox Live; and search engine Bing just became profitable. Analysts also think Microsoft will be able to find new sources of revenue from LinkedIn, the business- and employment-oriented social network that it recently purchased for $26 billion.

Analysts and fund managers are effusive in their praise for Nadella, who became CEO in 2014. “Nadella is very shareholder-friendly,” says Fidelity’s Persaud. And investors may soon realize just how friendly. Microsoft has $137 billion in cash and securities on its balance sheet, almost all of it held abroad. If the tax on repatriated earnings is reduced, Microsoft shareholders are likely to see more dividend increases and share buybacks.

• Symbol: UTX
• Price: $110.65
• Market capitalization: $91.1 billion
• Annual revenues: $57 billion
• Estimated 2017 earnings growth: -0.6%
• Price-earnings ratio: 17
• Dividend yield: 2.4%

If you screen for companies that are expected to generate superior earnings growth in 2017, you won’t find United Technologies. In fact, profits at the industrial conglomerate—which owns, among other things, aircraft-engine maker Pratt & Whitney, Otis Elevator and Carrier, the maker of heating and air-conditioning systems—are likely to be flat to down next year, with revenues climbing only modestly.

The culprit, says Don Taylor, manager of the Franklin Rising Dividend Fund, is Pratt & Whitney’s investment in its new PurePower Geared Turbofan jet engines, which reduce fuel use and ground noise in jetliners. The revolutionary jet engine burns 16% less fuel than conventional engines and reduces noise by 75%, while also significantly cutting carbon dioxide emissions. The company has invested about $10 billion in the new engines, and sales are just starting to ramp up.

United Technologies is well-positioned to benefit from the growth of commercial aviation all over the world. Increased defense spending during a Trump administration would also help. The company projects that Pratt & Whitney sales will rise at an annual rate of 10% or more from 2016 through 2020. And the company is optimistic about its other divisions as well. It sees annual sales gains of 5% to 7% in aerospace systems, 4% to 5% in climate controls and security (in addition to providing heating and cooling systems, the company is a key player in the creation of intelligent, energy-efficient buildings), and 4% to 5% for Otis elevators, escalators and moving walkways. If those growth targets are achieved, United Technologies should deliver double-digit earnings growth and raise its dividend by 8% to 9% a year starting in 2018.

United made headlines recently because of the deal its Carrier division struck with President-elect Trump and Vice President-elect Mike Pence, still Indiana’s governor, to keep some jobs at Carrier’s Indiana furnace plant. How this drama will play out for Carrier and the rest of United Technologies once Trump and Pence take office remains uncertain. In the meantime, investors can pick up this blue-chip industrial company, which will benefit from any pickup in global growth, at a reasonable price.

• Symbol: JPM
• Price: $86.53
• Market capitalization: $309.8 billion
• Annual revenues: $104.2 billion
• Estimated 2017 earnings growth: 9.8%
• Price-earnings ratio: 14
• Dividend yield: 2.2%

Like other financial stocks, JP Morgan has been on a tear since the election, rising 24%. But it may not be too late to hop aboard. The company should benefit from rising interest rates and less-demanding regulation, as well as faster economic growth, if that materializes. As its business has improved, the banking giant has been adding capital to its balance sheet. Each year, regulators have been allowing the bank to return more cash to shareholders, a trend that should continue, with a positive impact on dividends and stock buybacks.

If the corporate tax rate goes down to 20%, JP Morgan’s earnings, by one estimate, would rise by about 20%. And if the Federal Reserve does indeed raise short-term interest rates three times in 2017, as it recently suggested it would, that would also boost the bank’s earnings and, presumably, its stock price. More good news: CEO Jamie Dimon told the Wall Street Journal recently that JPMorgan’s bond-trading business has been much stronger lately. Bond-trading revenues have dropped 35% from their 2009 peak, and Dimon now thinks the company can recover half of that decline.

In evaluating JP Morgan, it’s important to recognize that European bank regulators have been tougher than their counterparts in the U.S. This has given JP Morgan a big edge over rivals such as Barclays (BCS) and Deutsche Bank (DB). Another positive that hasn’t shown up in earnings yet but may someday is the slew of dreadful headlines earned by competitor Wells Fargo (WFC). “JP Morgan is the best of the big banks,” says Commerce Value’s Franzen.

• Symbol: UNP
• Price: $104.65
• Market capitalization: $86.2 billion
• Annual revenues: $20.0 billion
• Estimated 2017 earnings growth: 10.3%
• Price-earnings ratio: 19
• Dividend yield: 2.3%

Like other railroads, Union Pacific has had a grim 2016, a result of low energy prices. Industrywide, the number of carloads fell 6.9% in the first nine months of 2016 (compared with the first nine months of 2015), with coal and oil shipments leading the decline. Union Pacific stock is 15% off its record high, set in February 2015.Cheap energy prices have been hurting Union Pacific in two ways. Low prices led many power plants to shift to natural gas instead of coal. And low gasoline prices made truckers a more attractive alternative for the shipment of some goods.

But with the rise in the price of natural gas and oil, analysts have become more bullish on Union Pacific and, on average, are calling for a 10% earnings gain next year. And that estimate may be low if the economy turns out to be stronger than expected and oil prices rise further or even remain stable.

The company handled the downturn wisely, reducing capital expenditures in the face of declining demand. But UP continued to reward shareholders, raising its dividend by 10% and boosting its share repurchase plan. The company has bought back 305 million shares since 2007 at an average price of $59.63, well below the current level. Union Pacific’s high tax rate may also make it an attractive investment. Its 2015 tax rate was 37.7%, so it could see a significant earnings pop if corporate tax rates are reduced.

New federal regulations on truckers may also help the company. By the end of 2017, the nation’s truckers will have to install an electronic logging device that will monitor vehicle speeds and locations. That will make it much harder for a driver to spend more hours on the road in a day than regulations permit.

• Symbol: DD
• Price: $75.26
• Market capitalization: $65.4 billion
• Annual revenues: $24.7 billion
• Estimated 2017 earnings growth: 13.4%

Price-earnings ratio: 21

Dividend yield: 2.0%

DuPont is not your grandfather’s chemical company. Today, 45% of its revenues come from agriculture, with another 10% from its electronics and communications division.

McKinsey & Company projects that crop demand for human consumption and animal feed will at least double by 2050. Given that 20% of what used to be farmland is no longer available for that purpose because of erosion and pollution, according to McKinsey, companies, such as DuPont, that improve agricultural efficiency will become increasingly valuable.

DuPont is also profiting from the trend toward healthier eating. It is a major player in nutritional additives, including vitamins. It is also helping dieters. When combined, two of its additives—Supro Soy Protein and Litesse dietary fiber—make consumers feel fuller for longer after a meal, thus reducing their cravings for more food. Meanwhile, the stock is actually cheaper than its P/E of 21 suggests. DuPont is scheduled to complete its merger with Dow Chemical (DOW) in the first quarter of 2017. If the two companies were combined today, they would have a blended P/E of 17 and a combined dividend yield of 2.6%. Moreover, in late 2018 or early 2019, the chemicals behemoth will become three separate public companies: One will focus on agriculture; the second, material sciences (among other things, this unit creates new materials, such as DuPont’s Kevlar bulletproof vests); and the third, specialty products in nutrition and electronics.

Bill Selesky, a senior analyst at Argus Research, is bullish on DuPont. He thinks the merger will help DuPont and Dow realize $3 billion in cost cuts and at least $1 billion in additional revenues. “The two companies are talking about raising the dividend,” he says, “and some major trends should help them. The world’s population will grow from 7.3 billion today to 9.7 billion by 2050, which should significantly benefit its huge agriculture business."

QUIZ: How Well Do You Know Dividends?

Energy stocks have been a horror show this year, eaten by the blob of low-priced oil. Many stocks have slumped 30% or more as oil prices have plunged and industry profits have trickled away. Don’t expect much relief in 2016 either; Kiplinger expects the price of West Texas crude to range from $45 to $55 a barrel, compared with the September 15 close of $44.59.

Painful as this may be, the major oil-and-gas producers are strong enough to survive. And Big Oil knows what investors want in lean times like these: a safe and secure dividend. Although industry profits have practically evaporated, corporate bosses are taking steps to maintain their dividend streams: tapping into cash on balance sheets, cutting costs and using other financial means to keep paying. Assuming the dividends keep rolling in, investors can effectively get paid to wait for a recovery in oil prices. If crude eventually does climb, the stocks will pay off handsomely. (All share prices are as of September 15.)

Start with Exxon Mobil (symbol XOM, $72.86), the largest U.S. oil-and-gas company, with a market value of $304 billion and a dividend yield of 4.0%. Hammered by a decline in profits from oil-and-gas production, Exxon’s earnings plunged by 52% in the second quarter from the same period a year earlier, to $4.2 billion. But profits from its “downstream” business—refining and petrochemical production—climbed by $795 million, to $1.5 billion.

Overall, Exxon reported $3.9 billion of free cash flow in the quarter (calculated as cash profits from operations and asset sales, less capital spending and other expenses). That was enough to cover the $3.1 billion in dividends Exxon paid. Moreover, free cash flow is likely to pick up in coming years as profit margins increase and Exxon lowers annual spending on oil-and-gas projects, says Morningstar analyst Allen Good.

Exxon could take other measures to cover its dividend in a pinch: tapping into the $4.3 billion in cash on its balance sheet, issuing more debt, and reducing or suspending share buybacks. Even if oil plunges again, the dividend will be the last thing to go. Exxon has raised its dividend for 32 years in a row, hiking it even when oil prices collapsed to $32 a barrel during the 2007-09 recession.

Shares of Chevron (CVX, $77.17), the second-largest U.S. energy company, boast a juicy 5.6% dividend yield. Chevron is not as financially solid as Exxon, with about 50% more long-term debt on its balance sheet and lower annual earnings. Chevron has also been spending heavily to boost sales, including $54 billion on a liquefied-natural-gas plant in Australia—a project that has drained cash and won’t turn a profit for years.

But Chevron isn’t likely to cut its dividend. With spending on some major oil-and-gas projects winding down, profit margins and earnings should pick up. By 2017, the company expects free cash flow to cover its dividend. Until then, it’s taking other steps to fund payments: trimming its budget for exploration and production, selling assets and suspending stock repurchases. Wall Street expects profits to climb by 33% in 2016, to $4.59 per share.

ConocoPhillips (COP, $47.28) offers a slightly higher yield, paying 6.3%. Revenues are on track to hit $37.5 billion this year—down sharply from $55.5 billion in 2014—and analysts expect Conoco to lose 33 cents a share for the full calendar year.

Despite the red ink, Conoco hiked its quarterly dividend in July by a penny per share, to 74 cents. At the time, CEO Ryan Lance told investors not to fret, saying “the dividend is safe. Let me repeat that.” For now, the company is using cash on its balance sheet to shore up payments; it ended the second quarter with $3.8 billion in cash, down from $5.1 billion at the start of the year.

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Conoco also plans to shelve some drilling projects and cut its exploration-and-development budget by about $1 billion a year until oil prices rebound. Earnings, meanwhile, should get a lift in 2016 as production picks up in North America and a new liquefied-natural-gas plant starts up in Australia. If oil prices recover modestly over the next few years, Conoco should have no trouble covering its dividend, says Brian Peery, comanager of the Hennessy Cornerstone Value Fund (HFCVX). “It’s a big ship and turning it around is difficult, but the company has done a good job,” he says.

Sitting atop the dividend ladder is British Petroleum (BP, $31.11), offering a stunning 7.7% yield. At $2.40 per year for each of BP’s American depositary shares, the dividend costs the company about $6.5 billion annually, a prodigious amount that, on the face of it, BP cannot afford. After shelling out $19.6 billion on oil-and-gas projects this year, the London-based company will lose $7 billion on a free-cash-flow basis, estimates Fadel Gheit, an energy analyst at investment firm Oppenheimer & Co. That means BP won’t generate enough cash to cover all its expenses, including its dividend.

BP’s finances should improve, however. The company recently agreed to pay $18.7 billion to settle state and federal charges related to the 2010 Gulf of Mexico oil spill. BP has now racked up $54.6 billion in pretax charges related to the spill, potentially putting the bulk of claims behind it

In the years ahead, BP is likely to focus on squeezing more costs from its business, boosting production and selling assets, says Gheit. With $32.6 billion in cash on its balance sheet, the company can use some of that money to help pay the dividend and plug any holes in its operating budget. Its free cash flow deficit should slip to $3.7 billion in 2016. Moreover, BP looks cheaper than other oil giants, says Gheit, who estimates that BP trades at 12.6 times estimated earnings, compared with an industry average of 13.9. He has an “outperform” rating on the stock and expects it to reach $45 over the next 12 to 18 months.

BP has a wild card in its back pocket as well: a nearly 20% stake in the Russian oil giant Rosneft. BP is developing some major oil-and-gas projects with Rosneft, a Kremlin-controlled company that pays dividends to BP. Doing business with the Kremlin is risky, of course, but if BP can help Rosneft lift sales and profits, BP’s stake in the company will gain value and the stock “should be a home run,” says Charles DyReyes, an energy analyst with Brandywine Global Investment Management in Philadelphia. “Investors view BP as a mismanaged collection of assets,” he adds. “We think that’s just not true.”

Buying energy stocks might feel like stepping in front of a Mack truck these days. Oil prices have collapsed, and major energy producers are playing a game of chicken as they pump at full throttle to try to drive weak producers out of business. Yet, with the sector deep in bear-market territory, share prices may already reflect much of the bad news.

For one thing, oil prices may have already bottomed. West Texas Intermediate crude, the U.S. benchmark, fell below $44 a barrel before rebounding to $52 in early February (at that price, it’s down 49% since last summer). But the market looks balanced between supply and demand. The world is expected to consume 92.4 million barrels a day this year, and the U.S. Energy Information Administration sees supplies touching 93 million barrels. That leaves scant spare capacity in case of a supply disruption. “Prices will go up, probably sooner rather than later, and people will be surprised at how fast they rise,” says Mike Breard, an analyst with Hodges Capital Management, in Dallas.

Kiplinger’s forecasts that oil will recover to $70 a barrel this spring. If we’re right, energy stocks are likely to post sharp gains. But even with oil in the $50 range, well-managed companies can make money. That’s certainly true of Chevron (symbol CVX, $110). Although the behemoth’s earnings plunged 30% in the fourth quarter, to $3.5 billion, its refining operations saw profit growth, offsetting weakness in the production side of the business. The company is spending billions each year to replace depleted wells and says it’s on track to boost oil-and-gas production by 21% by 2017. Chevron recently cut its capital budget and suspended share buybacks, but it has made protection of its $1.07-per-share quarterly dividend a priority. (Share prices are as of February 6.)

A stock with more potential (and more risk) is Chesapeake Energy (CHK, $21). Under former CEO Aubrey McClendon, the company acquired vast acreage throughout U.S. shale basins. Faced with a debt-laden balance sheet, current CEO Doug Lawler sold $5 billion worth of assets last year to shore up the firm’s finances, and he’s now focusing on improving profitability and buying back shares, says UBS analyst William Featherston, who recommends the stock. And if oil prices rebound to $80 a barrel, the stock will be worth at least $40 a share, says Tom Sudyka, comanager of the LK Balanced Fund.

Via Email: Energy Alerts from Kiplinger

Helmerich & Payne (HP, $68), an energy-services stock, has tumbled more than 30% in the past six months. The firm mostly provides rigs to land-based oil-and-gas producers. And although earnings rose 17% in the October–December quarter from the same period a year earlier, CEO John Lindsay warned that the results were “overshadowed by a rapidly deteriorating energy market.” Helmerich & Payne expects drilling activity and U.S. day rates for its rigs to decline sharply.

Yet Helmerich, the largest U.S. land driller, is likely to dig out of this hole and emerge stronger. The firm used the last downturn in oil prices to bolster market share from 9% in October 2008 to 16% at the end of 2014. Its land rigs are more profitable (on a daily operating basis) than those of major rivals, and its fleet is considered one of the most advanced and efficient.

On top of that, the stock yields a robust 4%. The company boasts a strong balance sheet and has ample cash to support the dividend. “The stock’s upside potential is much greater than the downside risk,” says Breard.

So much is happening in so many places—from Wall Street to Europe to America’s fracking fields—that your portfolio is probably suffering from motion sickness. Consider that in the first 25 trading days of 2015, the Dow Jones industrial average posted triple-digit moves on 17 occasions.

Then again, high-quality bonds, both taxable and tax-free, and high-yielding stocks, including utilities and real estate investment trusts, have begun the year in fine form. There has also been some good news on the energy front: Even as their profits slide because of the collapse in oil prices, energy giants such as ExxonMobil (symbol XOM) and Chevron (CVX) have resisted the temptation to cut dividends. Rather, they’re postponing exploration projects and paring share buybacks. Meanwhile, energy-related master limited partnerships continue to increase cash payouts.

On the fixed-income side, I grant that many bonds are expensive. How could they not be when the benchmark 10-year Treasury bond yields just 1.9%? Yet my fellow Kiplinger’s columnist James Glassman posits that the yield on the 10-year bond will sink below 1%. If he’s right, holders of long-term bond funds will reap additional capital gains because bond prices move in the opposite direction of yields.

It’s a different story if you’re seeking steady income. A 1% yield for 10 years just doesn’t cut it. You can get as much in an insured online savings account (see Best of the Online Banks).

Happily—and this is my primary message this month—you can do better than a 1% yield without taking extraordinary risks. Naturally, you’ll have to go beyond the bank for better cash returns. As always, I strongly advise against tearing up any successful income plan because of transitory news events. A broadly balanced collection of dividend stocks, high-quality bonds, and securities that pass along energy and real estate income is as sensible a strategy today as it was last year.

We offer four worthy holding tanks for your cash—three mutual funds and one exchange-traded fund—listed in descending order of current yield. Each pays you monthly. I suggest putting 25% of your short-term, low-risk money in each. (Yields and returns are through February 6.)

Fidelity Floating Rate High Income (symbol FFRHX; current 30-day yield, 4.4%; one-year total return, 0.6%), the original no-load bank-loan fund, delivers a generous yield. The fund carries some credit risk; the loans it invests in are made to companies with subpar credit ratings. But because the rates on those loans adjust regularly, the fund should maintain its share price in the unlikely event that short-term rates surge.

William Blair Income Fund (WBRRX; yield, 1.7%; one-year return, 2.7%) owns mortgage securities and high-quality corporate bonds with an average maturity of about four years. It provides decent yield without taking on too much interest-rate risk.

Metropolitan West Low Duration Bond Fund (MWLDX; yield, 1.1%; one-year return, 1.2%) sports a modest yield, but its low average maturity pretty much eliminates any price erosion from a bump in short-term rates.

Vanguard Short-Term Bond ETF (BSV; yield, 0.9%; one-year return, 1.2%) tracks an index of government and corporate bonds with one- to five-year maturities. It pays a hair less than 1%, but on any given day, the yield can climb above 1%. Because it’s an ETF, you can get in and out of it during the trading session. Annual expenses are a rock-bottom 0.10%.

Plunging oil and gas prices wreaked havoc with energy stocks in 2014. Seven of the 10 worst-performing companies in Standard & Poor's 500-stock index either provide drilling services or explore for oil and gas.

And unlike in other years, when a big share-price drop might lead to a rebound the following year, analysts maintain that many of 2014's worst performers are likely to fare poorly in 2015 as well. "Offshore drillers had bad fundamentals that got worse with the drop in oil prices," says Robert Pinkard, an analyst with RBC Capital Markets. "There could be even more downside in the first half of the coming year."

Three offshore drillers are on the list of the S&P 500's worst performers. Transocean (symbol RIG, $18.79) surrendered 56%, making it the S&P 500's biggest loser. Noble Corp. (NE, $17.30) dropped 43%, and Ensco Plc. (ESV, $30.72) declined 41%. (The list of the 10 worst performers is based on data as of December 26; share prices and returns, which include dividends, are as of December 29 and are courtesy of Morningstar.)

All three are international operations that contract with big oil and gas producers—outfits such as ExxonMobil (XOM) and Chevron (CVX)—to operate offshore wells. As energy prices fall, the firms' customers are less likely to launch new projects, putting pressure on the drillers.

Ironically, a year ago all of these companies appeared to be hot properties. That's because energy prices had been unusually stable; oil sold for roughly $80 to $100 per barrel for the better part of three years. That sparked demand for offshore and deep-water drilling and led to predictions of rapid growth for the industry. But as oil prices started to slide, from $105 per barrel in July to $55 in late December, those expectations were shattered. On the bright side, offshore drillers typically operate on long-term contracts, which can't be quickly canceled, so most drillers will continue to make money. But at best they will generate only tepid revenue and profit growth.

All of the other energy companies on the list of shame are involved in exploration and production, so their share prices closely follow swings in oil and gas prices. Shares of Denbury Resources (DNR, $8.22), a production company operating in the Rocky Mountains and Gulf Coast, surrendered 48% in 2014. Denbury has already announced that it will cut capital spending by 50% and keep production relatively flat over the next two years to conserve its resources while oil prices remain low.

The stock of QEP Resources (QEP, $20.01), which operates in shale basins in North Dakota, Oklahoma and elsewhere, dropped 34% in 2014. QEP recently sold its so-called midstream business—pipelines and energy-storage facilities—making it a pure play on the production of oil and gas. Wall Street worries that both Denbury and QEP may have trouble meeting their debt obligations if oil prices remain low for long.

Range Resources (RRC, $56.00) landed on the 10th spot of the worst-performers list, losing 33%. But Range may have better prospects than the market imagines because it has long-term leases on 1 million prime acres in the Marcellus shale basin in western Pennsylvania. That allows the company to commit to long-term production contracts required by big power utilitities. With production rising 20% to 25% a year, Range has both the experience and the reserves to be a major global player in natural gas, says Karl Chalabala, an analyst with CanaccordGenuity, a Canadian investment banking firm. His one-year price target: $76.

The market may also have unjustly punished the stock of Freeport McMoRan (FCX, $23.26), which lost 35% in 2014. Freeport primarily mines for copper, gold and other metals, but it increased its stake in the energy business through a 2013 acquisition. Moreover, Freeport is almost immune to the recent slide in oil prices, says UBS analyst Brian MacArthur, because it has used hedging to lock in prices of $70 to $90 per barrel on 80% of its crude oil production for 2015. Meanwhile, the price of copper, which has been weak, has begun to stabilize. MacArthur thinks Freeport's stock is a great buy and expects it to reach $33 within a year.

The remaining companies that make up the list of top losers have no one to blame but themselves for their sorry performance, and they appear to have significant challenges to overcome before they can stage a turnaround.

The shares of Genworth Financial (GNW, $8.46), the S&P 500's sixth-biggest loser, plunged 46% in 2014. The insurer offers a range of financial products, from life and disability coverage to mortgage insurance and annuities. But this year's results are all about long-term-care insurance, says Steven Schwartz, an analyst with Raymond James. In mid 2014, Genworth launched a thorough review of its long-term-care business and determined that it had significantly underestimated the amount of money the company needed to set aside to handle future claims. During the third quarter, Genworth boosted reserves by more than $500 million and posted a loss of $844 million. The stock, which hit the skids in July when the company first announced the long-term-care review, got slammed again when the third-quarter results came out. Can the stock recover? Yes, says Schwartz. "But long-term care is going to be a long-term saga," he says. "It's going to be many years before anyone truly knows what the profitability is on these contracts."

Avon Products (AVP, $9.56), by contrast, has been experiencing a long, slow slide into oblivion. The beauty-products company, whose shares lost 43% in 2014, has been plagued by increased competition and a deteriorating base of sales representatives, who have become increasingly disgruntled because of the company's inability to deliver orders accurately and on time. With everyone from Esteé Lauder to Procter & Gamble and Unilever going after the same consumers, Avon has lost its competitive edge, says Morningstar analyst Erin Lash. Even at today's depressed stock price, Lash says the shares are "fairly valued."

Likewise, Mattel (MAT, $30.77) has begun to look as dated as Barbie, the buxom plastic doll that has fueled the toymaker's growth since 1959. During the first nine months of 2014, Mattel's revenue dropped 14%, while profits plunged 35%. The company recently announced initiatives aimed at getting its executives out of conference rooms and back to the business of developing toys, and it replaced its marketing director with someone who successfully boosted Barbie sales in the past, says Linda Bolton Weiser, an analyst with the investment bank B. Riley & Co. Though both moves are positive, it could be a while before they result in improved profitability. For now, Weiser considers the stock a "hold."