With just one month left in the year, now is the perfect time for investors to conduct a portfolio review and update their watch lists for top stocks to buy now. But with the broader stock market indexes around all-time highs, it has become increasingly harder to scoop up shares of quality companies in the bargain bin.
When stock prices outpace dividend growth rates, it pushes dividend yields down. In fact, the S&P 500 now yields just 1.2%, which is likely too low of a yield for investors looking to boost their passive income streams or supplement income in retirement.
Fortunately, there are still excellent dividend stocks if you know where to look. Here's why ExxonMobil (XOM 1.37%), Vitesse Energy (VTS 1.93%), and Clorox (CLX +0.05%) stand out as top buys now.
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ExxonMobil is a solid find in the oil patch for procuring steady passive income
Scott Levine (ExxonMobil): Savvy income investors know that while high-yield dividends are alluring, they require close scrutiny since juicy payouts can dry up if companies are on shaky financial footing. This, however, is hardly the case with oil supermajor ExxonMobil. Over the past 42 consecutive years, ExxonMobil has hiked its dividend higher, illustrating a steadfast commitment to rewarding shareholders. For those seeking a reliable dividend stock that offers an enticing payout, ExxonMobil stock -- along with its 3.3% forward-yielding dividend -- is a solid opportunity.
Operating throughout the energy value chain, ExxonMobil is an energy powerhouse. The company recently reinforced its dominant industry position, moreover, with its acquisition of Pioneer Natural Resources, a transaction that more than doubled ExxonMobil's acreage in the Permian and is expected to result in annual pre-tax synergies of about $2 billion per year over the next decade. This complements the company's success in expanding profitability in its upstream business over the past five years. Whereas ExxonMobil reported earnings of $5 per barrel of oil equivalent in 2019, the company has generated earnings of $10 per barrel of oil equivalent in 2024 year to date, excluding the impact of Pioneer.
Those concerned that increases in renewable energy adoption may jeopardize the company's financial well-being -- and eventually the dividend -- may be overestimating the impact of solar and wind power adoption as fossil fuels will likely play a critical role for many years to come. Moreover, ExxonMobil is expanding beyond fossil fuels. The company recently announced a plan to invest over $200 million to expand its recycling operations in Texas, which will result in an annual recycling capacity of 350 million pounds when operations start in 2026. In addition, ExxonMobil also announced the signing of a memorandum of agreement with LG Chem for up to 100,000 pounds of lithium carbonate, which ExxonMobil plans to produce at projects in the United States.
NYSE: XOM
Key Data Points
Vitesse Energy's management focuses on what it does best
Lee Samaha (Vitesse Energy): One of the most interesting small-cap oil and gas stocks on the market, Vitesse is worth a look for investors confident that the price of oil won't collapse.
The company operates an interesting business model in that it isn't an owner/operator of assets. Instead, its management focuses on identifying and investing in working interests in wells (in the Bakken region) operated by other companies. The operators it works with market, sell, and transport the oil and gas extracted from the wells. As such, Vitesse's management is focused on creating value for shareholders by identifying and investing in productive assets.
In addition, management diversifies the risk in its operations through investment in multiple wells, and it also hedges its oil production to reduce its exposure to the volatility of the price of oil. For example, as of the end of the third quarter, management hedged 43% of its expected oil production in 2025 at an average price of $73.21 per barrel.
Hedging is always an imperfect science. Still, the strategy does derisk the stock somewhat. As such, Vitesse is a good option for investors who are positive that the price of oil can stay in the range it's traded in over the last couple of years. With a current dividend yield of 7.5%, it offers the potential for a good stream of income.
Clorox is a safe stock with a high yield
Daniel Foelber (Clorox): The cleaning products giant hit a new 52-week high on Nov. 22, surpassing $170 a share. It's been quite the run-up for Clorox after the stock closed below $130 a share at the end of May.
There's much more than the holiday cleaning season that has investors excited about Clorox right now. The company is close to completing a drawn-out and often sloppy turnaround.
Profit margins are improving, and sales are near an all-time high. Clorox is restoring its market share across key categories. Management is confident it can sustain its momentum, so it is continuing to budget for relatively high selling and administrative costs to support marketing and advertising. In sum, the business is doing the best we've seen in years.
Even when Clorox struggled, investors could count on the company's stable and growing dividend. Clorox has raised its dividend for 40 consecutive years and currently yields 2.9% -- giving investors a reliable, sizable, and growing source of passive income.
Clorox isn't the only household and personal products stock hovering around a 52-week high. Procter & Gamble hit a new all-time high on Nov. 27 -- surpassing $180 a share for the first time. P&G is a great company, but it only yields 2.2%. There's a similar theme playing out across the consumer staples sector. For example, Walmart is up 72% in 2024 and now yields just 1%.
Clorox offers investors a compelling yield and a reliable dividend backed by a growing business. With higher valuations across the market, fewer companies can check all three boxes, making Clorox a standout buy in December.
