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Sep
15
Tim Lambert
Warren Buffett has Gone North of the Border for Big Oil: Should You?
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Suncor Energy (NYSE: SU) is Big Oil and a Warren Buffett holding, which is a bullish combination.

Along with ConocoPhillips (NYSE: COP) and ExxonMobil (NYSE: XOM), Suncor Energy is an oil and natural gas holding of legendary investor Warren Buffett.  There is much about Suncor Energy that is superior to ExxonMobil and ConocoPhillips.  That is ironic as ExxonMobil and ConocoPhillips are based in Texas, with Suncor Energy headquartered in Calgary, Canada.  Energy firms in North America are now trading at a premium due to the political stability and economic security of the continent.

With Suncor Energy and other energy firms, Calgary is becoming a capital of oil and natural gas, too, although it is more often associated with Texas!

As with many other Big Oil Socks, Suncor Energy has a big dividend.  The average dividend yield is just under 2 percent for  member of the Standard  & Poos’ 500 Index (NYSE: SPY). The dividend yield for Suncor Energy is 2.66 percent.  In addition, Suncor Energy has a history increasing the amount of the dividend.  From that, shareholders get a raise simply for not selling the stock when the dividend amount is raised.  That rewards income investors for being long term shareholders.

It has been a good year for those owning the stock of Suncor Energy as it is up for the last month, six months, and year of market action (chart below).

For 2014, Suncor Energy is up by almost 12.50 percent.  It is now trading just under $39 as share.  The mean analyst target price for Suncor Energy over the next year of market action is $51.45.  Combined with the dividend yield, that could result in a solid total return for long term investors looking to bet with “The Oracle of Omaha!”

 



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