As has been detailed on many other articles on this site, Big Oil has a bullish future.
The recent purchase of 40 million shares of Exxon Mobil (NYSE: XOM) shares by Warren Buffett certainly proves that point. Buffett is a major shareholder of two other oil companies, Suncor Energy (NYSE: SU) and ConocoPhillips (NYSE: COP). It is likely “The Oracle of Omaha” will make other buys in the energy sector.
There are any reasons to be bullish on companies such as Exxon Mobil, Suncor Energy, ConocoPhillips and others in oil and natural gas beyond the investing by Warren Buffett.
Demand for oil and natural gas will continue to rise. That was detailed in recent reports from the United States Energy Agency and the International International Agency. Much of that demand will be from the booming countries of Asia. The two biggest growth sectors will be transportation and petrochemicals, which use massive amounts of fossil fuels.
Big oil stocks are also rewarding for investors due to the high dividend yield.
Exxon Mobil, Suncor Energy, and ConocoPhillips all pay above market dividend yields. The dividend yield for BP (NYSE: BP) is around 5%, more than twice the average for a member of the Standard & Poor’s 500 Index. These companies also have a history of raising their dividends, too.
From that, shareholders of Big Oil stocks will benefit from both growth and income. Global demand for energy will lift the price and the dividend should continue to grow, based on history. Having Warren Buffett invest in the sector makes it even more bullish.