Natural Gas Stocks to Buy for Portfolio Diversification

Natural stocks to buy for portfolio diversification feature companies that have proven staying power amid market fluctuations.

The natural gas stocks to buy for portfolio diversification also pay dividends. That income stream combines with any capital appreciation created by rising share prices to boost total return for investors.

Diversification is a wise strategy since some sectors or industries invariably lose favor with investors, while others may gain appeal. Efforts to diversify one’s investment portfolio are aimed at having too much money focused on a single sector.

Natural Gas Stocks to Buy for Portfolio Diversification: XOM

Irving, Texas-based Exxon Mobil Corp. (NYSE: XOM) is best known as an oil company, but also is engaged in providing natural gas. Jim Woods, a seasoned stock picker who leads the Investing Edge newsletter, is recommending ExxonMobil (NYSE: XOM) for the publication’s Income Multipliers portfolio.

Worldwide oil industry giant Exxon Mobil operates in more than 56 countries, with 61,000 scientists, engineers, researchers, technicians, professionals and other employees. The company’s size and capabilities are cited by Woods, who chose the stock for the Income Multiplier portfolio in Investing Edge. The stock pays a “great dividend” and boasts a double-digit-percentage gain so far this year, he added.

Exxon Mobile offers a 3.41% dividend yield and is up 13.19% so far in 2025, as well as 5.73% in the past month, despite dipping 1.28% in the last month. Woods is far from the only one who likes the prospects for XOM.

Jim Woods heads the Investing Edge newsletter.

“Over the last 25 years, XOM’s dividend has averaged a growth rate of 6.4%,” said Michelle Connell, who heads Dallas-based Portia Capital Management. “Despite the pullback in oil prices, I don’t expect this dividend growth rate to decrease. XOM has a very powerful portfolio of strategic assets. One asset is their oil reserves in Guyana. These reserves can be drilled with relatively low cost, thereby increasing XOM’s cash flow significantly.”

Another key asset is XOM’s natural gas reserves, Connell continued. Specifically, 40% of the electricity generated in the United States is powered by natural gas, she added.

“Data centers require a significant amount of electricity to be operational,” Connell counseled. “In the next three years, data centers are expected to demand 3.5 times the amount of electricity that they’re utilizing now. XOM will be able to profit from this new requirement.”

Michelle Connell heads Portia Capital Management.

A diverse asset portfolio has allowed XOM to reduce its costs to compensate for declining revenues associated with lower oil prices, Connell said. She forecast that the company’s operating margins would remain stable at about 9%.

“This backdrop will be good for energy investors interested in dividends and/or capital appreciation,” Connell counseled.

Chart courtesy of www.stockcharts.com.

Natural Gas Stocks to Buy for Portfolio Diversification: EPD

One of the fans of energy stocks and funds is Mark Skousen, PhD, who recommended a high-income, dividend-paying investment years ago that I bought and still own. I scaled back some of my stock holdings in other investments recently, but opted to keep Skousen’s long-term recommendation, Houston-based Enterprise Products Partners (NYSE: EPD).

EPD currently offers a dividend yield of 6.62%, and most recently paid a quarterly dividend of 54.5 cents per share on Oct. 31. The total return for EPD so far this year is 8.23%, and it rose 1.75% in the past three months. Amid weakening energy prices recently, the stock has slipped in price 1.49%.

Chart courtesy of www.stockcharts.com.

Skousen heads the Forecasts & Strategies investment newsletter and co-leads the Fast Money Alert trading service with Woods. In fact, Woods also recommends EPD in his Investing Edge newsletter, and EPD is a long-time holding in Forecasts & Strategies. 

Mark Skousen co-leads Fast Money Alert.

Natural Gas Stocks to Buy for Portfolio Diversification: DVN

Oklahoma City, Oklahoma-based oil and natural gas company Devon Energy Corporation (NYSE: DVN) is recommended as a buy, based on the latest research report about the company from Citi Research posted on Tuesday, Dec. 16. The investment firm tweaked its target price methodology of DVN to 2026 debt-adjusted cash flow (DACF), at which point Devon benefits from another year of its internal efficiency improvement program.

The investment firm boosted its DVN target price to $44 per share, reflecting approximately a 4.5x enterprise value (EV) / DACF multiple. The valuation uses Devon’s DACF in a normalized commodity price environment of $65 WTI, according to Citi Research. The multiple is slightly reduced due to near-term crude price risk, which Citi Research reported is balanced against gains from DVN’s efficiency improvement program.

The outlook for DVN factors in recent changes to Citi Research’s commodity price forecasts for oil and gas in the years ahead, as well as other modeling tweaks, the investment firm wrote in its latest DVN research note. Citi Research now forecasts $6.63 billion in EBITDAX in 2026 at $58.50 West Texas Intermediate WTI crude oil prices. For 2027, Citi Research forecasts EBITDAX of $7.34 billion at $61 WTI.

EBITDAX is a financial metric tailored for oil and mineral exploration companies, excluding exploration expenses from earnings before interest, taxes, depreciation and amortization (EBITDA). The EBITDAX metric helps assess an energy company’s income generated from operations to help lenders and analysts evaluate performance.

Chart courtesy of www.stockcharts.com.

Natural Gas Stocks to Buy for Portfolio Diversification: Geopolitical Risk

President Trump and his envoys keep seeking to forge a peace agreement between Ukraine and Russia. Revisions have been made to an earlier proposal that called for Ukraine, the country whose sovereign territory has been invaded, to relinquish some of its land to the aggressor, Russia. Recent polls of Ukrainians show roughly 75% of those who responded oppose giving up any land to Russia. Those sentiments reflect the sacrifices endured by Ukrainians to defend their freedom and protect against Russia’s aggression.

I watched a Ukrainian solider answer a BBC reporter’s question in the past week, and he opposed turning over land to Russia for a peace agreement. The soldier responded that it would not be long before Russia’s President Vladimir Putin would want even more land. Many observers speculate that Putin would want to attack other nearby countries in the future.

Claims by Russia’s leaders that they seek peace are tied to demands that Ukraine cede control of large swaths of its territory after fighting for nearly four years to defend their turf and its citizens. Increased prosperity typically is the reward for countries that have the greatest freedom. Mark Skousen, PhD, who heads the Forecasts & Strategies investment newsletter and is the Doti-Spogli Chair of Free Enterprise at Chapman University in Orange County, California, is a free-market economist who travels the world to praise freedom as conduit to open opportunities for prosperity across the globe.

President Trump is willing to pledge U.S. commitment to defending Ukraine if its leaders agree to a peace plan, but details have yet to be shared. Trump also has asked other countries to boycott Russian oil to reduce funding of the attacker’s war machine. The idea has gained support, but not enough to stop the war thus far.

Despite President Trump’s repeated calls for peace and an end to the killing, Russia’s president and his empire-building cadre of fellow leaders remain undeterred. The war is threating to worsen further if Putin and his comrades in the country’s leadership keep shrugging off damage to Russia’s economy and force its citizens to fight and die, despite limited territorial gains since the early phase of its invasion.

Russia’s miliary strikes keep killing children, women and elderly civilians in Ukraine with little apparent regard for human life. The attacker’s tactic of charging ahead to gain portions of Ukraine’s territory after Russia’s initial invasion gains nearly four years ago has been criticized by many military strategists. So far, Russia’s leaders have pursued a protracted war, rather than prosperity through new trade agreements that President Trump is offering both sides in the conflict to end the fighting and bloodshed.

Paul Dykewicz, www.pauldykewicz.com, is an accomplished, award-winning journalist who has written for Dow Jones, the Wall Street Journal, Investor’s Business Daily, USA Today, the Journal of Commerce, Seeking Alpha, GuruFocus and other publications and websites. Paul is the editor of StockInvestor.com and DividendInvestor.com, a writer for both websites and a columnist. He further is the editorial director of Eagle Financial Publications in Washington, D.C., where he edits monthly investment newsletters, time-sensitive trading alerts, free e-letters and other investment reports. Paul previously served as business editor of Baltimore’s Daily Record newspaper. Paul also is the author of an inspirational book, “Holy Smokes! Golden Guidance from Notre Dame’s Championship Chaplain,” with a foreword by former national championship-winning football coach Lou Holtz. Follow Paul on Twitter @PaulDykewicz.