Both Royal Dutch Shell (NYSE: RDS-A) and ExxonMobil (NYSE: XOM) just reported disappointing earnings.
As a result, the stock prices for each are down. But it will note stay that way for the long term. Investors now have an opportunity to buy two solid companies at a discount. Both ExxonMobil and Royal Dutch Shell should make for profitable investments for the long haul.
There are many reasons for that.
On the macro level, the need for oil and natural gas will increase in the years ahead. By 2040, the US Energy Information Agency expects the global demand for oil to increase by more than 55%. Oil and natural gas will gain from that, due to the lack of viable alternatives. Coal is too dirty. Solar power and other related are not as efficient nor as effective as fossil fuels. That will not happen for some time, if ever.
Each has a worldwidel presence. That will allow for Royal Dutch Shell and ExxonMobil to gain from the greater demand for oil and natural gas. Billions have been committed by both companies to further the production to meet the greater global demand.
At the micro level, both ExxonMobil and Royal Dutch Shell are very solid investments. Each holds a strong position in the industry: Exxon Mobil is the world’s biggest oil company. Royal Dutch Shell is the largest in Europe.
For the shareholder, Royal Dutch Shell and ExxonMobil are committed to enhancing the total return.
Each pays a dividend that is above the average for a member of the Standard & Poor’s 500 Index. Both have a history of increasing the dividend yield. There have also been stock buybacks initiated by each to reward long term shareholders.
For the long haul, the shareholders of both ExxonMobil and Royal Dutch Shell should expect a profitable experience from owning the stock.