The Commodities Futures Trading Commission, a regulatory group in the nation’s capitol, recently reported that Big Money investors such as hedge funds and others had bullish bets on oil prices rising at a five month high. Many other articles in this site have constantly touted the benefits of investing in oil companies for the long term, no matter the size. These positions from Big Money firms shows the bullish future for oil firms ranging from ExxonMobil (NYSE: XOM), the world’s biggest with operations around the globe, to Mondial Ventures (OTN: MNVND), a small cap focused on the legendary oil-rich regions of Texas.
Every report that comes out states that the demand for energy will increase.
The bulk of that will have to be met by oil. It is currently the most widely used fuel source. That should increase. Most of the growing need will come from emerging market nations such as China and India. Big Oil companies such as ExxonMobil, Chevron (NYSE: CVX), and Royal Dutch Shell (NYSE: RDS-A) are positioned well to meet that need.
Due to the size of ExxonMobil, Chevron, and Royal Dutch Shell, these firms are excellent income stocks.
All have dividend yields above the average of just under 2 percent for the Standard & Poor’s 500 Index. The dividend yield for Royal Dutch Shell is more than twice that amount. In addition, Chevron, Royal Dutch Shell, and other oil companies have traditions of increasing the dividend amount. ExxonMobil is a Dividend Aristocrat. That means that it has increased the size of its dividend annually for at lest the 25 past years.
But, due to the size, big growth will not be coming from Big Oil.
It is small cap oil firms like Mondial Ventures that could deliver the soaring growth that gushers forth from these companies striking it big. ExxonMobil and the others are simply too large to deliver huge returns. It also costs too much to find the size of production required to maintain the stock price for these firms, reported a recent article in The Financial Times. The growth in oil should come from small caps like Mondial Ventures that operate in big time areas for oil finds.