Are these the ASX’s best oil and gas stocks?

While many investors may be discouraged by the news of iron ore prices falling even lower and how this is affecting the market overall, there is one industry that is building up for a great 2015.

That’s the energy industry, which over the next year or so will start producing and exporting LNG to the Asian markets.

Below are the companies which I think are some of the best energy stocks to hold because they are expected to pay much higher dividends and potentially rise strongly in share price as earnings from LNG expand.

Probably the most commonly known is Origin Energy Ltd (ASX: ORG). an integrated energy company that develops oil and gas resources, but also is involved in power generation and retail power utility services to residential customers. It is a joint stakeholder in the Australia Pacific LNG project (APLNG) in QLD which should begin LNG exports in mid-2015.

Once the project is working at full capacity, the company expects it will generate about US$1 billion annually in distributable cash flow. That will create a big change in Origin Energy’s earnings and its share price should rise from it. This is one definitely to watch and start a position in.

Woodside Petroleum Ltd (ASX: WPL) is the biggest energy producer on the ASX and has LNG projects like the North West Shelf. As it moves toward possibly starting its Browse project offshore from WA, it is now using its surplus billions of dollars to invest in future development projects near Africa and in South East Asia.

Also, it is expanding into the world energy trading market for short-term contracts between buyers and sellers of excess LNG supply. This is one more way the company can generate revenue from the upcoming expansion of the LNG export market. Woodside pays a huge 5.7% dividend yield fully franked, so dividend investors will like that steady income.

Santos Ltd (ASX: STO) is involved in the Gladstone LNG project (GLNG) currently being developed, which is expected to export its first gas in 2015. Also, it has a stake in the PNG LNG project which started shipping LNG this year, so revenue from that will flow into Santos this year as it waits for the GLNG to start up.

Already Santos has increased its interim dividend because of this new revenue. It said in its interim report that it plans to maintain and increase dividends as cash flow increases. Also, dividend payments will be reviewed when the GLNG begins exporting. This could mean a much bigger dividend for shareholders. It pays a 2.6% yield fully franked.

One more top dividend pick

Dividend investors looking for steady income that can grow well over time should consider these three stocks. To this group we can add one more promising dividend stock to boost your returns. Our top analyst, Scott Phillips, recently discovered a cheap but growing ASX stock with a 6% grossed-up dividend yield  that could be a buying opportunity now.

The Motley Fool has written a free report The Motley Fools Top Dividend Stock for 2014-2015   which it’s sharing with all interested investors.

To get the report, simply click on the link  here and enter your email address – it takes less than 30 seconds – and we’ll send it to you, completely FREE!

Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. 

While many investors may be discouraged by the news of iron ore prices falling even lower and how this is affecting the market overall, there is one industry that is building up for a great 2015.

Below are the companies which I think are some of the best energy stocks to hold because they are expected to pay much higher dividends and potentially rise strongly in share price as earnings from LNG expand.