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ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX) are the two largest U.S.-based oil and natural gas companies. However, there are plenty of other dividend-paying energy companies to consider.

Two that stand out today are Equinor (NYSE: EQNR), down 15% year to date, and ConocoPhillips (NYSE: COP), down 3% so far this year. Both companies pay attractive dividends and are worth buying now.

Equinor's outsized profits have been a boon for income investors

ExxonMobil and Chevron have paid and raised their dividends annually for an impressive 42 years and 37 years, respectively.

In contrast, Equinor's dividend history is a little more complicated. The Norwegian oil and natural gas giant slashed its quarterly dividend from $0.27 per share at the end of 2019 to $0.09 per share at the start of 2020 as the COVID-19 pandemic took a sledgehammer to its cash flow.

However, Equinor cashed in on the oil and gas recovery over the last few years -- booking record revenue, net income, and free cash flow in 2022. Equinor's relatively low capital expenditures and inexpensive cost of production helped amplify its gains. Equinor's performance dipped in 2023, but its results were still excellent.

EQNR Revenue (Annual) data by YCharts.

By late 2021, Equinor had raised its ordinary dividend back up to $0.20 per share, and it had begun to pay "extraordinary" dividends as well that were based on the performance of the company. These extraordinary payouts started at $0.20 per share -- lifting Equinor's total dividend above its pre-pandemic level -- and rose as high as $0.70 per share in Q3 2022.

Equinor paid out a whopping $2.90 per share in dividends in 2022, and $3.40 per share in 2023. For 2024, Equinor plans to pay a $0.35 per share ordinary dividend and a $0.35 per share extraordinary dividend each quarter. That would add up to $2.80 per share for the year, giving it a forward yield of 10.5% based on the current stock price of $26.71.

Equinor is a uniquely conservative oil major. It has been careful about ramping up production or making splashy acquisitions in the oil patch because of its aggressive energy transition goals. Equinor is 67% owned by the Norwegian state, and its management is heavily influenced by Norway's climate action targets. Over the long term, Equinor's oil and natural gas production will likely decrease, and its renewable energy investments will go up. By 2030, the company plans to allocate more than half of its annual gross capital expenditures to renewable energy projects and low-carbon solutions.

Equinor's approach to the dividend makes sense within the context of its long-term goals to support a green and sustainable energy future. Instead of accelerating its fossil fuel investments, Equinor is using its profits from oil and gas to pay large dividends and fund its energy transition plan. Equinor would be a good fit for your portfolio if you want a high-yield stock and agree with the company's strategy.

ConocoPhillips jumps aboard the M&A train

ConocoPhillips is one of the largest U.S. exploration and production companies by market capitalization. Like Equinor, ConocoPhillips has its own climate targets, but those longer-term carbon-reduction goals are not stopping it from significantly ramping up oil and natural gas production over the medium term.

The company increased production by just 2% year over year in the first quarter. But production is about to surge once it completes its $22.5 billion acquisition of Marathon Oil (NYSE: MRO). That deal is a bet that oil and natural gas prices will stay at moderate levels. If all works out as hoped, ConocoPhillips will generate a boatload of free cash flow that it can use to pay down debt, accelerate growth, or increase its dividend.

Like Equinor, ConocoPhillips has implemented a dual dividend program with an ordinary dividend and an extraordinary dividend. Its ordinary dividend currently sits at $0.58 per share quarterly, while its most recent extraordinary dividend was $0.20 per share. Annualized, that gives ConocoPhillips a yield of 2.8%, which is good, but far lower than Equinor's.

In October 2022, ConocoPhillips paid an extraordinary dividend of $1.40 per share. But since then, it has been paying far lower dividends, and with good reason. The company's value proposition to shareholders is based on long-term free cash flow growth, not maintaining a stagnant business and passing along profits. As such, its dividend is merely one aspect of the investment thesis. The bigger draw is the company's growth, which could lead to a strong stock price performance, higher future dividends, and share buybacks.

ConocoPhillips is the perfect energy stock if you're confident in mediocre to moderate oil and natural gas prices and growing U.S. energy exports. The company believes it will be able to buy back $20 billion of its stock over the next three years, which would offset most of the $22.5 billion all-stock transition for Marathon Oil. If all goes according to plan, ConocoPhillips will emerge with a more attractive asset base, higher production, and essentially no dilution to existing shareholders.

Choose the path that's best for you

While the short-term performance of energy stocks can be heavily dependent on oil and natural gas prices, their long-term performance can vary wildly based on management objectives and strategic execution. Comparing Equinor to ConocoPhillips highlights two starkly contrasting ways of pursuing growth. Equinor is gradually decreasing its focus on fossil fuels and shifting toward a more balanced portfolio of fossil fuel and renewable assets. In contrast, ConocoPhillips is focused on free cash flow and growth.

The best way to approach the energy sector is through a company that aligns with your outlook on the industry. If you believe that oil and natural gas aren't going anywhere for a while, then you may agree that now is the time for energy companies to generate a lot of free cash flow and grow their businesses, and then accelerate energy transition investments in the future.

There's also the ExxonMobil approach, which involves increasing oil and natural gas production and making low-carbon investments with an emphasis on profitability.

In sum, the best stock for you will depend on your risk tolerance, your view of the energy transition, and whether you want to invest in a company that is prioritizing high dividend payments now or is charting a path toward higher payments in the future.

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Daniel Foelber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends Equinor Asa. 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.