There is no denying the investment appeal of Big Oil stocks such as BP PLC (NYSE: BP), Chevron (NYSE: CVX), and ExxonMobil (NYSE: XOM), among others.
Many previous articles on this site have made that point.
Big Oil stocks are starting to falling in recent market action. ExxonMobil, the world’s largest oil and natural gas company, is down for the last month and quarter of market action. BP PLC is off for the last month, quarter, and six months of market action (chart below). Over the last month of market action, Chevron has dropped more than 3 percent.
That means that the dividend yields for each have risen by that much!
It is a simple proposition: when the price of a stock falls and the dividend amount remains the same, the yield rises. What makes this even better is that BP PLC, Chevron, and ExxonMobil all have a history of increasing the amount of the dividend. In that way, shareholders get a raise for not selling the stock!
There is certainly no reason to sell BIg Oil stocks as the future is bullish.
Many reports state that oil and natural gas usage will increase in the decades. Much of that will be from growth in Brazil, China, India, and other emerging market nations. Oil and natural are still the most attractive energy sources for widespread usage. Coal pollutes too much. Sun, wind, and other alternative power supplies do not have the capabilities to meet mass market needs.
Big Oil stock prices should eventually rebound.
Until then, there is a hefty dividend to pay for the wait. Should the prices fall more, the dividend yield will rise. Increases in the dividend from the company will make it even more appealing. Short term falls in the price should make long term total returns even more rewarding for Big Oil stocks!