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OIL - and Oil Stock in the future?
Old 01-24-2020, 04:48 PM   #1
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OIL - and Oil Stock in the future?

Greetings all.....

Pick your poison - be it Conoco, Exxon, Chevron, etc.

Such venerable businesses. History of decent executives and good strong steady growth albeit with ups and downs.

Many of them pay 4-5% in dividends and oil seems to be a resource that most of us need and use no different than toothpaste or toilet paper.

They seem a bit beaten down, for example Exxon is at 5.25% dividend - heck, I could live WELL on 5.25% even if the stock froze in value.

I'm wondering if the market feels the future belongs to alternatives and oil is going bye bye? But then again there's BILLIONS of people in Africa, and India that have never even had a car or motorbike yet - so I can't see oil going away.

Any thoughts? If these stocks slide much more I'd be really tempted to buy and not look at it for years.
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Old 01-24-2020, 04:56 PM   #2
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I suspect nobody here knows the future - if it helps (and it probably does not) I jumped in recently and bought RDS-B (Shell to you and me) which was and is paying a 6.5% approx div (as a result of the same share price fall as all the rest).
I'm betting as it were that these boys are not about to go away any time soon - unless of course Greta gets her way !!
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Old 01-24-2020, 08:16 PM   #3
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These companies/shares are very cyclical. Come summer, they'll all be pushing their 52-week highs. So the time to buy is now and through February/March before talk of summer demand picks up. You'll then need to decide around September/October if you want to hold through the winter, as they'll all trend now. Same thing happens most every year.

As long as you remain well diversified and do not overweight them, there's no problem - enjoy the great dividends. I've found it best to never go all-in - just buy little bits every time it makes a move lower. That way you're never ripping your butt owning so much and it's too difficult to buy more. Owning less, you can always buy more at lower prices and be happy that you're able to get more at better prices.

Also have a good look at PSX - it was spun off from Conoco, shows better growth, better earnings, and better dividend growth. I do not trust Conoco CEO. Exactly 4 years ago, he swore for months that the dividend would not be cut. Assured everyone each time the subject came up. When the next dividend came around, to prove it, they raised it by a penny. Then, not even making it to the next dividend payment, they announced a 75% reduction in the dividend.

Anyhow, with interest rates continuing to show weakness, the dividends on most all of them look juicy at this time. Oil use is not going to just disappear - not in our lifetime. ICE engines will still be the overwhelming majority of autos and commercial vehicles on the road, and in industrial sectors.
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Old 01-24-2020, 09:21 PM   #4
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I don't see petroleum usage reducing anytime soon as world wide energy demands are too great, but there has been added supply in recent years depressing the commodity price and causing companies to struggle with profitability. Some predict that high yielders such as OXY and VET will have to cut their dividend in the future. I have not tried to research XOM myself other than to read a few articles that paint both a positive and negative picture on the stock. The energy marketplace may still have some pain in the future, especially if there is a general recession. But with other sectors of the market elevated it could be a good place to invest.
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Old 01-24-2020, 09:44 PM   #5
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The large oil companies will likely be fine for most of our lifetimes but I wouldn't put too much into any one stock. I put too much into a small oil company and it lost almost all of it's dividend and almost all of it's share value. Major lesson learned.
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Old 01-25-2020, 04:33 AM   #6
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Posted last night:
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Old 01-25-2020, 06:52 AM   #7
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Personally, I started buying back (DCA) in both CVX and XOM over the past week or so as the prices have dropped... BTW, both report late next week.
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Old 01-25-2020, 07:20 AM   #8
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What about VDE? I was thinking about that as a try and then this thread popped up? Is Alexa starting to read minds now?
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Old 01-27-2020, 10:39 AM   #9
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Iím happy with the BP shares Iíve been accumulating through reinvested divvied since 2014. I started when I thought the share price hit from the oil spill had passed. Over that period Iím only up <15% so I wouldíve been better off not reinvesting.

I think the Majors understand they need to transition to be energy companies and it will take a while for economies to shift away from oil. Lack of global or even domestic energy policy doesnít help.
...with no reasonable expectation for ER, I'm just here auditing the AP class.Retired 8/1/15.
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Old 01-27-2020, 10:54 AM   #10
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I've owned Conoco for several years and it has been quite a ride. Cut their dividend by 2/3rds at one point.
Its a small position so not fretting but it can be frustrating.
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Old 01-27-2020, 05:24 PM   #11
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