Better Oil Stock: Diamondback Energy vs. Chevron

Key Points

Diamondback Energy is a large onshore U.S. oil and gas producer.

Chevron is a globally diversified integrated energy giant.

• 10 stocks we like better than Diamondback Energy ›

Energy prices are volatile right now, as news from the Middle East's geopolitical conflict has investor emotions running high. That said, the tensions have led to a swift increase in oil prices, which is very good news for pure-play energy producers like Diamondback Energy (NASDAQ: FANG). Long-term investors might still find a more diversified energy company, such as Chevron (NYSE: CVX), preferable. Here's what you need to know.

Diamondback Energy is a good company

It would hardly be a mistake to buy Diamondback Energy. It is a well-run business that has proven it can survive the typical swings in the energy sector. Right now, however, the industry is benefiting from high oil prices, which have driven the stock up around 30% so far in 2026, as of this writing. The company hasn't reported first-quarter earnings yet, but given the rise in oil and natural gas prices, they are likely to be good reading.

Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »

That's actually the problem you have to consider as you examine this upstream-focused energy stock. Its top and bottom lines are almost entirely driven by oil and gas prices. That's great right now, while energy prices are high, but when they fall, the story here will change dramatically.

Diamondback Energy is the kind of stock you buy if you are trying to trade around energy prices. If you expect oil prices to keep rising, it could be a good option. Given the already high oil prices, however, much of the good news is likely to have already been priced into the stock. The real risk of buying this stock is what happens when oil prices eventually fall.

Chevron is the boring way to own energy

Chevron faces similar risks, given that it also produces oil and natural gas. However, its business is far more diverse. Diamondback is a focused U.S. producer while Chevron has a global production footprint. And Chevron's business extends across the entire energy value chain, which is diversification that Diamondback doesn't offer. Chevron is basically built to survive through the entire energy cycle. The best proof of that is the decades' worth of annual dividend increases it has rewarded investors with.

If you feel like you have to buy an energy stock right now, as the sector is flying high, Chevron is the more conservative way to do that. The stock is up around 20% so far in 2026. Chevron won't protect you from an energy downturn, but investors can count on the dividend to keep paying.

For reference, Diamondback's yield is 2.1%, and Chevron's is 3.8%. The average for the energy sector is just under 2.3%, suggesting a premium is being afforded to Diamondback while Chevron offers a more compelling value.

Tread with caution in the energy sector

Diamondback's business is likely to perform better than Chevron as energy prices rise. But Chevron is likely to hold up better than Diamondback's when energy prices eventually fall. And Chevron has a more attractive and reliable dividend. If you are a conservative investor, Chevron is probably the better energy pick right now, given that oil prices have already advanced significantly.

Should you buy stock in Diamondback Energy right now?

Before you buy stock in Diamondback Energy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Diamondback Energy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $496,473! Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,216,605!

Now, it’s worth noting Stock Advisor’s total average return is 968% — a market-crushing outperformance compared to 202% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

**Stock Advisor returns as of May 2, 2026. *

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.