Energy Stocks Are Secretly Better Than Treasuries. Here’s Why Bob Brackett Is Loading Up on Exxon and Chevron.

Bernstein analyst Bob Brackett has a reframe for income investors who keep dismissing energy stocks because the headline yield looks thin against the 10-year Treasury. On a recent episode of The Real Eisman Playbook, Brackett argued the comparison is the wrong one entirely.

“Don’t compare the yields you get from a commodity company to government yields. Compare them to TIPS. These are inflation protected,” Brackett said. “My 3% dividend from Exxon, if the dollar devalues, the barrel of oil gets more valuable and they’ll sustain that.”

The math matters right now. The 10-year TIPS real yield sits at 2.13%, while Exxon’s dividend yield is 2.56% and Chevron’s is 3.62%. Both come with growing buybacks and a barrel of oil that, at $101 WTI, sits roughly 40% above year-ago levels.

The COVID Stress Test

Brackett’s central evidence is what happened when demand cratered. Exxon Mobil (NYSE:XOM | XOM Price Prediction) held its quarterly payout at $0.87 throughout 2020. Chevron (NYSE:CVX) maintained $1.29 every quarter. ConocoPhillips (NYSE:COP) paid $0.42 to $0.43 through the worst of the pandemic. European majors Shell, BP, and Total cut. Demand fell by 20 million barrels per day, and the American majors did not flinch.

Capital Returns Are Doing the Heavy Lifting

Exxon plans $20 billion in 2026 buybacks, with $4.9 billion already repurchased in Q1, and just hiked the dividend for the 43rd consecutive year. Chevron has returned more than $5 billion to shareholders for 16 straight quarters and delivered $27.1 billion in total returns during 2025. Underlying Q1 2026 earnings at Exxon rose to $8.77 billion from $7.58 billion, while Chevron beat consensus EPS, reporting 45.56% at $1.41 versus $0.97 (8-K filing).

The E&P Transformation

Steve Eisman pressed Brackett on the exploration and production complex. “Until maybe 2016, ’17, I thought they were run by lunatics,” Eisman said, describing CEOs who would “drill baby drill” regardless of price. “These were companies that were crazy,” and “not ownable.”

Capital discipline changed the math. Refiners and disciplined E&Ps now trade on returns, not rig counts, with names like EOG Resources, Marathon Petroleum, and Phillips 66 illustrating the shift through buybacks, dividend hikes, and capex restraint.

Widows and Orphans, Reconsidered

XOM is up 53.04% over the past year; CVX is up 44.27%. With CPI sitting at the 90.9th percentile of its 12-month range, the inflation-protection argument keeps gaining weight. As Brackett concluded: “These are really attractive widows and orphans, pack them away, compound for a long time.”