ExxonMobil (NYSE: XOM), the world’s largest oil and natural gas company, is falling in price at the same time that the exchanged traded funds for oil, United States Oil (NYSE: USO), and natural gas, United States Natural Gas (NYSE: UNG), are falling.
That is an unusual situation that long term investors should use to their advantage to accumulate shares of ExxonMobil at a discount.
ExxonMobil is down for the last week, month, quarter, and six months of market action. For 2014, ExxonMobil is off by almost 5.4 percent (chart below). Interestingly enough, it was not that long ago that legendary investor Warren Buffett made a substantial buy of ExxonMobil stock. Buffett owns the stock in a number of energy concerns, including oil giants ConocoPhillips (NYSE: COP) and Suncor Energy (NYSE: SU), too.
Suncor Energy and ConocoPhillips have fallen in recent market action, too.
But it is not the case for United States Oil, and United States Natural Gas. For the last week of market action, United States Natural Gas is up more than 5 percent. Over that same period, United States Natural has risen more than 5 percent. That same period has witnessed a jump of nearly 4 percent for United States Oil.
Over the long term, ExxonMobil should follow that trajectory as oil and natural gas stocks generally follow the price of the commodity.
While waiting for that the take place, there is a dividend yield of almost 3 percent. The average for a member of the Standard & Poor’s 500 Index (NYSE: SPY) is just under 2 percent. In addition, ExxonMobil is a “Dividend Aristocrat.” To earn that title, a publicly traded company must have increased its dividend annually for at least the past 25 years. From that, the shareholders of ExxonMobil get a raise just for not selling the stock. It does not get much better than that for income investors!
At present, ExxonMobil is close to its 52-week low, about 13 percent away.
There is every reason to believe that ExxonMobil will rise again. It is now around $94.40 a share. The mean analyst target price for ExxonMobil over the next year of market action is $102.95. Combined with the dividend yield, that represents a solid potential return for long term shareholders.