Goldman’s Energy Dividend Picks: Why Devon and HF Sinclair Still Offer Upside

Goldman Sachs highlights two attractive energy dividend opportunities, despite the sector's strong rally. Analyst Neil Mehta favors Devon Energy Corporation (DVN) and HF Sinclair Corporation (DINO) for their potential upside. DVN's stock has gained 33% this year, while its large-cap E&P peers have risen about 40%, and the company trades at an attractive 14% free-cash-flow yield.

The stock offers a 2.3% dividend yield and a $55 price target, implying a 12% upside. HF Sinclair, on the other hand, has surged 131% year to date, but Goldman believes it still trades at a discount to refining peers. With a $114 target, the stock offers a 7.5% upside and a 2% dividend yield. Goldman's case for DVN hinges on its underperformance and high forward free-cash-flow potential, with the Delaware Basin playing a crucial role.

Meanwhile, HF Sinclair's value lies in its diversified earnings base and restructuring plans, such as separating the Lubricants & Specialties business. However, both investments are vulnerable to changes in oil prices and execution challenges.