Many previous articles on this site have detailed the many benefits of investing in Big Oil stocks such as BP PLC (NYSE: BP), Chevron (NYSE: CVX), and ExxonMobil (NYSE: XOM) (chart below).
These stocks continue to perform very well, with the robust dividend yields being very attractive to income investors.
There are many factors contributing to this. In large part, this had to do with the low interest rate environment that the United States Federal Reserve and other central banks around the world are implementing. That makes stocks with healthy dividend yields very attractive.
It is tough to beat big oil for big dividends.
At present, the average dividend yield for a Member of the Standard & Poor’s 500 Index (NYSE: SPY) is under 2 percent. The dividend yield for BP PLC, the second largest oil company is Europe, is 4.47 percent. ExxonMobil, the biggest energy company in the world, has a dividend yield of 2.44 percent. For Chevron, the dividend yield is 3.17 percent.
Many Big Oil companies have a history of increasing the dividend amount.
That rewards long term shareholders with more in dividend income. Basically, those who own the stock get a raise annually just for not selling. There is also plenty of cash to initiate buybacks to raise the share price. There is the bonus of this attracting institutional investors such as mutual funds and pension groups that help to keep stock prices high. That is especially so for mutual funds and others that only invest in income stocks.
The future is bright for Big Oil stocks.
Demand will increase substantially. Interest rates will remain low. That will make the stock of BP PLC, Chevron, ExxonMobil, and others very attractive. There should be a place in all portfolios for the many benefits that Big Oil stocks bring in both capital gains and dividend income, which makes for a rewarding total return for long term investors.