Bank of America Still Loves 4 Dividend Paying Energy Stocks Even After Oil Plunged

While the two-week ceasefire came as a relief to many, especially after President Trump had ramped up the rhetoric, the reality is that while boats can move through the Strait of Hormuz, Bank of America reported that a stunning 11 million barrels per day of production remains shut in. They went on to point out that it could take weeks, and perhaps even months, to get oil flowing again and reactivate fields, and that it won’t happen at all if the temporary truce doesn’t hold. The huge 400 million barrel build in the second half of last year, which was looking like it could double this year, was wiped out in 5 weeks of hostilities. The BofA team notes that, in the future, balances are tighter, mid-cycle trading will be higher, and efforts to refill the strategic petroleum reserves will fuel demand. They remind investors that oil stocks will give back some of the recent huge gains, but not all of them, and four top companies remain strong buy ideas. 

The Bank of America team concluded this when discussing how things may play out:

Thursday’s trade action will be closely watched for any discernible pattern that could serve as a playbook for firm conflict resolution. The XLE stocks, which outperformed by offering the most efficient oil beta, are vulnerable to rotation. Not to undermine the outperformance in SMID-cap oil, but large caps have been a source of frustration – as defensive positioning took priority, leaving valuations stretched with many discounting close to $75 oil. But to be fair, this could easily cut both ways – the next two-week stretch is a new episode in this war. While risks are rebalancing, this could easily spiral back into a live conflict, deadlocked by different foundational points of view, leaving no obvious off-ramp to keep flows funneling into large-cap oil leverage.

Four powerful companies, some with big Permian Basin exposure, are the top picks now, and all, of course, have Buy ratings and make sense for investors to take advantage of what could be a higher-for-longer price scenario than was ever anticipated as we started 2026. 

California Resources

While likely off the radar of many energy investors, it pays a very reliable 2.29% dividend. California Resources Corp. (NYSE: CRC) is an independent energy and carbon management company committed to energy transition.

The Company’s segments include Oil and Natural Gas and Carbon Management.

Its Carbon Management business, Carbon TerraVault, focuses on the design, installation, operation, and maintenance of carbon dioxide equipment, transportation assets, and storage facilities.

The Oil and Natural Gas segment explores for, develops, and produces crude oil, oil condensate, natural gas liquids, and natural gas.

California Resources operates in oil and gas basins, including the San Joaquin, Los Angeles, and Sacramento Basins.

It also has interests in oil and gas fields throughout the San Joaquin basin, including in: 

• Elk Hills
• Buena Vista
• Coles Levee
• North Belridge and South Belridge
• Kern Front
• Lost Hills
• Cymric
• McKittrick
• Midway Sunset
• Coalinga

The Los Angeles Basin is a northwest-trending plain about 50 miles long and 20 miles wide. The Company is also focused on the Uinta basin.

Bank of America has set a $76 target price for the stock. 

Devon Energy

This S&P 500 energy stock has been impacted by volatility amid the pending purchase of a major rival, despite its attractive dividend policy, which includes a fixed dividend that has more than doubled since 2021, yielding 1.92%. Devon Energy Corporation (NYSE: DVN) is an oil and gas producer in the United States with a diversified multi-basin portfolio headlined by an acreage position in the Delaware Basin. The Company is primarily engaged in the exploration, development, and production of oil, natural gas, and natural gas liquids (NGLs).

Devon Energy is set to acquire rival Coterra Energy Inc. (NYSE: CTRA) in an all-stock deal valued at roughly $58 billion, including debt. This combination would vault the merged company into the front ranks of U.S. shale producers. Under the terms announced February 2, 2026, each Coterra shareholder receives 0.7 Devon shares, leaving existing Devon investors with a 54% stake in the combined entity. The shareholder vote on the deal’s completion will be held on May 4th. 

It owns a portfolio of assets located in the:

• Delaware Basin,
• Rockies
• Eagle Ford
• Anadarko Basin

The Delaware Basin extends across southeast New Mexico and into west Texas. It offers exploration and development opportunities from many geologic reservoirs and play types, including the oil-rich Wolfcamp, Bone Spring, Avalon, and Delaware formations.

The company’s Rockies development consists of its Williston Basin and Powder River Basin assets.

The Eagle Ford operations are located in Texas’s DeWitt and Karnes counties.

The Anadarko Basin development is located in western Oklahoma. It has a joint venture with Dow to develop a portion of its acreage in the Anadarko Basin.

The Bank of America price target is set at $53.

Diamondback Energy

This is one of the best pure-play Permian Basin exploration and production companies, paying a solid 2.07% dividend. Diamondback Energy (NASDAQ: FANG) is an independent oil and natural gas company focused on the acquisition, development, exploration, and exploitation of unconventional onshore oil and natural gas reserves primarily in the Permian Basin of West Texas.

The company’s activities are primarily focused on the horizontal development of the Wolfcamp and Spraberry formations in the Midland Basin, and the Wolfcamp and Bone Spring formations in the Delaware Basin, within the Permian Basin.

Its subsidiary, Viper Energy, is focused on owning and acquiring mineral and royalty interests in oil and natural gas properties, primarily in the Permian Basin, and derives royalty and lease-bonus income from such interests.

Diamondback Energy has approximately 859,203 net acres, which primarily consists of 742,522 net acres in the Midland Basin and 116,681 net acres in the Delaware Basin.

The company’s subsidiaries include:

• Diamondback E&P
• Rattler Midstream GP
• Rattler Midstream
• QEP Resources

The Bank of America target price for the shares is $202.

Ovintiv

While likely off the radar for many, this is another solid value energy idea with a 1.98% dividend. Ovintiv Inc. (NYSE: OVV) is an oil and natural gas exploration and production company focused on developing its multi-basin portfolio of assets in the United States and Canada.

The Bank of America analysts noted this:

Our best ideas have been more than just a call on oil. Ovintiv is our top pick for 2026 and is a rerating story anchored in portfolio cleanup. With NuVista, Ovintiv can now claim 15 years of oil runway in two of the best assets in E&P – the Northern Midland Basin, and the condensate-rich Montney, versus a peer avg. of +/- 10 years. The pending Anadarko sale ($3.0bn), expected imminently (early 2Q), not only fully funds NuVista ($2.7bn, ~$1.2bn cash), but leaves a clean balance sheet (0.6x) that underwrites a new 50-100% payout ratio.

Its operations include the marketing of oil, natural gas liquids (NGLs), and natural gas. Its segments include USA operations and Canadian Operations.

USA Operations include the exploration for, development of, and production and marketing of oil, NGLs, natural gas, and other related activities within the United States.

The Canadian Operations include the exploration for, development of, and production and marketing of oil, NGLs, natural gas, and other related activities within Canada.

The company has assets in:

• Anadarko Basin
• Montney Basin
• Permian Basin

Anadarko is a liquids-rich play located in west-central Oklahoma, spanning Blaine, Canadian, Custer, Dewey, Garvin, Grady, Kingfisher, McClain, and Stephens counties. Montney is a condensate and natural gas play located in northwest Alberta and northeast British Columbia.

The Bank of America target price is $68.