Why I Love Investing in Oil and Gas Stocks
A significant portion (~20%) of my portfolio can be found within this category. While it is a big portion to have invested in one industry, I’ve done it for the following reasons:
1. Oil/Gas companies have a proven history of paying increasing dividends
2. They are some of the biggest/most profitable companies in the world
3. They are not going out of business in my lifetime (ie: BP bounced back from their disaster after only a couple years of pain)
4. It’s relatively simple to understand their business, although one thing that’s not so easy to figure out is how much oil/gas they have in reserve. But, it eases my mind slightly to know that all the big companies are investing heavily in alternative energy sources, which will prove profitable at some point in the not-so-distant future.
Oil and Gas Stocks in my Portfolio
Here are the stocks I own, and a review by the Dividend Monk, if available. That site is my trusted source when I need to decide if I should invest in a certain stock or not. As for which one I’d choose if forced to pick one? Probably Exxon Mobil simply because they’re the biggest and have the most resources to put into exploration and technology development.
BP: I bought it relatively soon after their big spill when the price was extremely cheap. Even though they cut their dividend to stockpile cash and take care of the fines, I was confident that they would resume their regular dividend increases in the next few years (and they have).
PSX: I got this in a spin-off from COP in 2012, because they wanted to separate the exploration and refining parts of their company and since it was so cheap have since added to my position. It’s more than doubled since it was spun-off and I’ve considered selling but it’s now at a dividend yield of %2.00 and it looks to be increasing.
You can find a complete list of my portfolio holdings here.
And also check out one of my favorite books about investing by one of the true investing geniuses, The Intelligent Investor. It’s kind of the book you can’t afford not to read, if you’re looking to get into the fundamental investing game (Fundamental vs. Technical Analysis on YouTube).