One of the first things President Donald Trump did after taking office for his second term was to declare a "national energy emergency" and reverse the energy policies of the previous government. With his "drill, baby, drill" slogan, Trump vowed to boost oil and gas production in the U.S., bring prices down, fill up the strategic petroleum reserve, and export more energy from the U.S.
In short, Trump is pro-oil, and that has put the spotlight back on oil stocks. But there's a catch.
While Trump wants oil and gas companies in the U.S. to increase production, he is targeting lower energy prices driven by higher supply. So while higher production could benefit oil and gas producers, any drop in commodity prices could offset those gains. At the same time, it's hard to predict where oil prices could go, given the many market forces at play, such as the role of OPEC+ and the impact of tariffs.
Given the backdrop, although I expect oil stocks to hog the limelight under Trump's presidency, those with a disciplined approach to growth, strong balance sheets, and commitment to shareholder returns should thrive over the next five years. Here are the two such oil stocks that could soar as Trump's energy plans take shape.
This oil stock has big growth plans for the next five years
ExxonMobil (NYSE: XOM) is the largest oil-producing company in the U.S. and among the world's largest oil exploration and production, and petrochemical, companies. ExxonMobil made a huge growth move last year when it acquired Pioneer Natural Resources in an all-stock deal worth nearly $60 billion that will more than double ExxonMobil's production in the Permian Basin. The company now expects synergies worth $3 billion from the acquisition, more than 50% of its initial expectations.
In December 2024, ExxonMobil also laid out its growth plans for the next five years. It aims to invest around 45% of its cash flow from operations on average, or nearly $140 billion, in the Permian and other growth projects between 2025 and 2030. ExxonMobil expects to earn $20 billion in incremental earnings and $30 billion in incremental cash flows by 2030 versus 2024.
At a Brent Crude Oil price of $65 per barrel, ExxonMobil could have nearly $165 billion in surplus cash flow by 2030. That's huge, and I'd expect the bulk of that cash to go to shareholders in the form of dividends or share repurchases. ExxonMobil has increased its dividend for 42 consecutive years, and the streak should continue.
On Trump's order, the Department of Energy also granted an export permit extension for Golden Pass, a liquified natural gas (LNG) terminal owned jointly by ExxonMobil and QatarEnergy. The Golden Pass is expected to start operations later this year.
Trump's energy plans, therefore, could work in ExxonMobil's favor in several ways. When combined with the company's leadership in oil production, strong financials, cost advantage, and solid growth plans, ExxonMobil stock could have a solid run-up in the next five years.
2025 is a big year for this high-yield oil stock
My next top oil stock pick for Trump's energy plans is Enterprise Products Partners(NYSE: EPD). The best thing about Enterprise Products is that the company can benefit from increased drilling activities in the U.S. without worrying about crude oil prices. It should be a win-win for shareholders.
Enterprise Products operates on the midstream side of the oil and gas business, which means it stores, transports, and distributes crude oil, natural gas, natural gas liquids, refined products, and petrochemicals under long-term, fee-based contracts. The company, therefore, continues to generate stable cash flows, regardless of where oil prices are. Meanwhile, an uptick in oil drilling and production activity could boost demand for Enterprise Products' pipeline services.
In any case, Enterprise Products is entering a new growth phase. Out of the $7.5 billion worth of major projects under construction, $6 billion is slated to come online this year.
On the one hand, these projects should start contributing to Enterprise Products' cash flows. On the other, with major projects coming online, the company's capital spending should taper from 2026 onward and free up more cash.
Much of that cash could go to shareholders, as Enterprise Products is a top dividend-paying stock that also repurchases shares consistently. Enterprise Products has raised its dividends for 26 consecutive years, and those dividends, when reinvested, have significantly boosted shareholder returns over the years.
The past five years were exceptional for the oil and gas stock, as the company prioritized organic growth and steadily grew its cash flows. With the bulk of its development pipeline going into operation this year, the next five years under Trump could be big for this 6.5%-yielding oil dividend stock.
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool recommends Enterprise Products Partners. The Motley Fool has a disclosure policy.
