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Some oil stocks provide investors with the dual benefit of the potential gains from oil prices and the receipt of dividend payments. The price of oil fluctuates on a regular basis in accordance with the political climate, due to the fact that many of the major oil producing countries are politically unstable. In recent months, we have seen that disasters such as the BP accidental oil spill can also impact share prices and even the payment of dividends.

The oil market is a relative unknown because it is difficult to predict how much oil will be needed in the future. It is also hard to determine how much oil is being discovered or will soon come to market as well as how much that oil will cost. Attempts to guess are frequently incorrect, though some who are considered experts still make the effort.

Oil investors need to remember that the market continues to price proved oil reserves lower than their replacement cost. This means that it is cheaper to purchase shares of traded companies with proven than those that drill for new reserves. Investors can purchase shares in oil companies with proved reserves for lower than $10 per barrel, while the replacement cost averages $25 per barrel.

Stocks that pay dividends are in an even better position, from an investor perspective. These provide shareholders with income streams even when their companies are not in a growth phase. Until recently, BP was known for its excellent dividends of approximately eight percent. Chevron, Occidental Petroleum, Conoco, Tidewater, and Exxon are some other dividend-paying oil stocks that investors should consider.

Investing in oil stocks that pay dividends help individuals weather the rough times that lie ahead for this industry. With talk of increased regulation and a current moratorium on offshore drilling, the result is likely to be negative when it comes to stock prices. Having a dividend payment to fall back on makes the investment appear a lot more worthwhile.