Many pieces on this site have been bullish about the benefits of investing in energy stocks, especially oil and natural gas.
That was proven to be accurate as natural gas performed the best of all commodities in 2013, according to an article in The Wall Street Journal. Natural gas futures were up 26% for the year. The exchange traded fund for natural gas, United States Natural Gas (NYSE: UNG), did well, too (chart below).
Investors should continue to be bullish on oil and natural gas stocks for the future.
The global demand for energy will continue to rise. Earlier today, the Markit Purchasing Managers Index came out and showed that manufacturing around the world is increasing. For Japan, it is at a seven year high. Natural gas and oil are needed to power those factories. That is a bullish report for the oil and natural gas sector.
There have also been a number of positive studies from the International Energy Agency and the United States Department of Energy.
All of these reports project a massive increase in global energy demand. The bulk of this will have to be handled by oil and natural gas. Alternative energy is just not there in terms of meeting widespread needs. Coal is too dirty. China, the world’s biggest consumer of coal, is trying to reduce its dependence due to how dirty it is when it burns.
For investors, oil and natural gas stocks remain a solid long term investment.
That is why legendary investor Warren Buffett, considered by many to be the best ever, is a major shareholder of Exxon Mobil (NYSE: XOM), Phillips 66 (NYSE: PSX), and Suncor Energy (NYSE: SU). If that is not enough, Exxon Mobil, Suncor Energy, and Phillips 66 all have dividend yields that are above the average for a member of the Standard & Poor’s 500 Index. Combined with the bullish future for the sector, that should result in a rewarding total return.