What to do with XOM?

[marko]

As a dividend investor (mostly mutual funds), I saw that Exxon had dropped in price a few years ago to the point of producing a 6%+ dividend. I bought a modest holding and have been enjoying the 6%+ dividend ever since.

It is still giving me that 6%, but the price has appreciated to over a 92% gain. I've almost doubled my money.. It does seem to have topped out of late.

A nice problem to have, but I'm wondering: just keep merrily rolling along, cashing the dividend checks? Sell all of it and invest in something else? Sell just the gain? I tend to be a strong buy and hold type, but I'm wondering if, with the impressive gain if I've overstayed my welcome.

[Car-Guy]

I've always (well for decades anyway) owned XOM and CVX but I got totally out of all stocks last year. A really wise man told me during the pandemic to buy all the XOM I could get my hands on.

With your gains, I'd probably cash in. I've always viewed big oil as safe but very long term holds. So YMMV depending on your goals.

[Texas Proud]

I think it makes a difference on how big this is to your total...


If a small amount just keep holding... 6% divi is really good...


Are you reinvesting? My mom bought a small amount back in 1980 and reinvested divis... when she passed she had a LOT in XOM..



The only negative is that there are so many that want to stop big oil that they are coming after it... just heard this morning that California is suing the big oil companies because they lied... someone said like big tobacco and the payout might be bigger..

[marko]

Quote:

Originally Posted by Texas Proud I think it makes a difference on how big this is to your total... If a small amount just keep holding... 6% divi is really good... Are you reinvesting? My mom bought a small amount back in 1980 and reinvested divis... when she passed she had a LOT in XOM.. The only negative is that there are so many that want to stop big oil that they are coming after it... just heard this morning that California is suing the big oil companies because they lied... someone said like big tobacco and the payout might be bigger..

It's about 2% of holdings. I spend the dividends and don't reinvest. And yeah, I also hold Altria, MO.

IMO, "they" can come after big oil all they want. I'm 72 years old and don't see it going away or changing much in what's left of my lifetime. But that's another story for another thread.

[Montecfo]

I own some oils here but they're usually short to midterm trades. Emma held xom in forever but I do hold COP and some independents.

I feel we can continue to ride the price for a while.

[Koolau]

Quote:

Originally Posted by marko As a dividend investor (mostly mutual funds), I saw that Exxon had dropped in price a few years ago to the point of producing a 6%+ dividend. I bought a modest holding and have been enjoying the 6%+ dividend ever since. It is still giving me that 6%, but the price has appreciated to over a 92% gain. I've almost doubled my money.. It does seem to have topped out of late. A nice problem to have, but I'm wondering: just keep merrily rolling along, cashing the dividend checks? Sell all of it and invest in something else? Sell just the gain? I tend to be a strong buy and hold type, but I'm wondering if, with the impressive gain if I've overstayed my welcome.

Is it the same nominal dividend or is it actually 6% of the 92% improved price?

When I left Megacorp, I kept a lot of my stock because it was paying a decent "return" in dividends. But now, since Megacorp only raises it's dividend a little bit each year (but every year), suddenly, with the new and improved stock price, the % dividend is pathetic. Heh, heh, I'm glad I held on, but can't brag about my dividends. YMMV

[harley]

I usually like to cash out my profit in a case like this. When my stock has increased, usually doubled or better, I sell enough to recapture the original investment, so that whatever I have remaining is basically free. But I developed that technique back in the roaring 90s, when stocks were splitting pretty often. That allowed me to keep the same number of shares while still cashing out. And yes, I realize that mathmatically that doesn't make any sense. But it was a good way to allow me to sell occasionally, which was hard for me.

However, in the case of XOM as well as a few other really good paying dividend stocks, as well as a few others, I consider them lifetime stocks, and just hold. I would hold in your case, since it's only 2% of holdings. You can't really go too wrong either way.

[Sunset]

Quote:

Originally Posted by Koolau Is it the same nominal dividend or is it actually 6% of the 92% improved price? ...

The yield now on XOM is: 3.17% because it has doubled in price for OP.

[marko]

Quote:

Originally Posted by Sunset The yield now on XOM is: 3.17% because it has doubled in price for OP.

Yes. I'm getting 6% of what I originally paid when the price was half of what it is now. That's only because I'm paid on number of shares, not what those shares cost at any point in time. I was just able to buy twice as many shares as I could today.

[Whisper66]

The long term stock price of XOM is strongly related to the price of crude. I'll attach a 10 yr plot if I can figure out how. A purchase of XOM in the last few years (2019-2022)at $70/shr was during a period that XOM $/shr was relatively low in relation to the value of crude oil. Since late 2022, XOM stock price has risen more than crude prices by quite a bit. So today this would suggest to me that it is a good time to consider selling unless you think there will be an extrodinary runup in oil prices. You've had a great gain (congrats!) and now are earning a 3.2% dividend. Unless you think crude price is going to run up a lot more than it is at now, my opinion FWIW is it's a good time to take your gains and reinvest elsewhere. Even very safe treasuries will get you over 5% today.

[target2019]

I would cash in some of those gains for XOM, provided you have another use for the proceeds.

There's a thread about cashing in equity to take a bite of 5% CD's for instance.

Or maybe you have holdings that will do well as interest rate reduction occurs.

[marko]

Quote:

Originally Posted by Whisper66 The long term stock price of XOM is strongly related to the price of crude. I'll attach a 10 yr plot if I can figure out how. A purchase of XOM in the last few years (2019-2022)at $70/shr was during a period that XOM $/shr was relatively low in relation to the value of crude oil. Since late 2022, XOM stock price has risen more than crude prices by quite a bit. So today this would suggest to me that it is a good time to consider selling unless you think there will be an extrodinary runup in oil prices. You've had a great gain (congrats!) and now are earning a 3.2% dividend. Unless you think crude price is going to run up a lot more than it is at now, my opinion FWIW is it's a good time to take your gains and reinvest elsewhere. Even very safe treasuries will get you over 5% today.

I was going to argue that I'm not making 3.2% because I'm being paid 6+% on my original purchase. But now you're telling me that I essentially have half my value (my gains) not doing anything for me. I really am getting 3.2% of my real balance. Another epiphany! (need to go back and change "how good an investor are you? " on that other thread.)

Yes, I could get 5% in T Bills. I can also get 10% in something like PTY, or 8% in a floatingbank rate fund..... More thinking to do.

[Koolau]

Quote:

Originally Posted by harley I usually like to cash out my profit in a case like this. When my stock has increased, usually doubled or better, I sell enough to recapture the original investment, so that whatever I have remaining is basically free. But I developed that technique back in the roaring 90s, when stocks were splitting pretty often. That allowed me to keep the same number of shares while still cashing out. And yes, I realize that mathmatically that doesn't make any sense. But it was a good way to allow me to sell occasionally, which was hard for me. However, in the case of XOM as well as a few other really good paying dividend stocks, as well as a few others, I consider them lifetime stocks, and just hold. I would hold in your case, since it's only 2% of holdings. You can't really go too wrong either way.

I like both your approaches. I'm looking at Megacorp as "lifetime" stock and some of my purchases were at less than a dollar (when you divide up all the stock splits over the years.) My Megacorp isn't a good dividend stock (though they always increase the dividend.) But, I just feel comfortable with it as it has always made me money when I hang onto it. Maybe there's a bit of nostalgia there - or maybe it's the half million dollars it's made me in the past 5 years.

Thanks for sharing your two approaches.

[Alex The Great]

XOM is a great stock but the entire industry is volatile. I do have a small number of XOM shares and will keep them long term, because my goal is not to realize the gain but collect dividend. So far it has a proven track record of growing dividend since 1990s but of course no guarantees.

[SunGuy]

I would work to getting out of it, if your investment horizon is over 30+ years. RE/Solar/nuclear is going to be the main energy sources.

They may survive for another 10-15 years, but not much longer than that.

Get into new/young companies like Solar Integrated Roofing Corp (SIRC).

[marko]

Quote:

Originally Posted by SunGuy I would work to getting out of it, if your investment horizon is over 30+ years. RE/Solar/nuclear is going to be the main energy sources. They may survive for another 10-15 years, but not much longer than that. Get into new/young companies like Solar Integrated Roofing Corp (SIRC).

SIRC is a penny stock and has a market cap of $2M. I have been in XOM for the dividend. In 30 years I'll be 102 years old.

I also believe that the early "demise of oil is exaggerated" considering its many uses beyond fuel.

Thanks but no thanks.

[Texas Proud]

Quote:

Originally Posted by SunGuy I would work to getting out of it, if your investment horizon is over 30+ years. RE/Solar/nuclear is going to be the main energy sources. They may survive for another 10-15 years, but not much longer than that. Get into new/young companies like Solar Integrated Roofing Corp (SIRC).

I remember back in the late 90s people kept telling me that old companies were a thing of the past and to invest in these new internet companies.. one example to get out of was XOM and another was JPM...


With divis reinvested for either of these stocks the return is above 11% a year... most of the internet companies are gone...


We will need oil for other things besides fuel for much longer than my kids will be alive... I would bet on XOM over a small solar roofing company... which BTW XOM could buy with pocket change...

[SunGuy]

You can also do both, I love to play both sides of trends. And looking into companies that are out of favor like JXN, and RYAM.

But I also invest as a % of my income a lot more than most(about 10% pre-tax and 30-50% post tax each month), and am a very aggressive 100% stock investor.

I have a pretty broad Roth IRA that has place holder partial shares of over 50 companies, and I evaluate with a modern day version similar to Walter Schloss. I'll look for intra-month bargains within those, or also new ideas that are recent event driven deals.

[Montecfo]

Quote:

Originally Posted by marko SIRC is a penny stock and has a market cap of $2M. I have been in XOM for the dividend. In 30 years I'll be 102 years old. I also believe that the early "demise of oil is exaggerated" considering its many uses beyond fuel. Thanks but no thanks.

I think so. Also, misguided public policy has resulted in reduced investment in oil and gas discovery and production. The transition to non-persistent sources will be much slower and more fraught than some predict.

This and the fact that carbon fuel stocks are deeply out of favor suggests these can be very attractive investments over time.

[pjm-7]

You can donate the appreciated shares to charity and use the current value for the deduction. Use the LTCG rate for the shares that you are comfortable paying the tax on and donate the rest. Since we are at the end of the year do this split strategy on some of the shares now and the rest after the first of the year.