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Jun
26
Ida Hansen
Falling Gross Domestic Product in US Highlights Appeal of Big Oil
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The gross domestic product for the United States was just restated so that it actually fell by 2.9 percent.  It may seem odd to tout oil and natural gas stocks such as ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), BP (NYSE: BP), and others in that group, but that is exactly what is needed in the portfolio of long term investors.  Even with short term economic problems in the United States, the future is still bullish for BP, Chevron, ExxonMobil, and other energy firms.

Much of that has to do with growth in China, India, Indonesia, and other emerging market nations.

That is where the growth in consumer demand will come in the decades ahead.  To meet that need will require a great deal more in oil and natural gas production.   Coal is considered to be too dirty.  Wind, solar power, and other forms of alternative energy do not have the ability to meet the demand of the masses.  That is unlikely to change for the future.

That is what makes the long term outlook so bullish for BP, Chevron, ExxonMobil, and others.

All have done well in 2014 for a variety of factors.  Tension abroad has increased the appeal of oil and natural gas stocks.  Investors now realize how much more suitable oil stocks are as a safe haven asset than gold.  Combined with the economic aspects of oil and natural gas, that makes these stocks more alluring.

So does the dividend income of each.

That is especially so in a low interest rate environment.  Stocks that have an above average dividend income become more attractive.  That is certainly the case with ExxonMobil, BP, and others.  Many Big Oil companies like Chevron have dividend yields that are higher than average.

Even with gross domestic product down for the last quarter, those factors make oil and natural gas stocks appealing for the future!

 



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