Exxon Mobil Is The Energy Stock To Own

Exxon Mobil Corporation (XOM) is a manufacturer and marketer of commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics and a range of specialty products.

It also has interests in electric power generation facilities. This company has raised dividends for 28 consecutive years. The stock currently yields 3% and trades at a P/E of 14.

This oil giant does business in over 200 countries but derives only 30% of its revenues from the US. The company has over 130 projects worldwide whose goal is to increase reserves of oil and natural gas. The company’s future acquisition of XTO Energy will boost natural gas production by over a quarter.

Exxon Mobil has doubled its dividend in the last ten years and has less shares outstanding than one decade ago. The company has an excellent balance sheet and the best management in the business. The world's largest oil company has sold off from over 90 dollars a share in 2008 and is now near a five year low in the high 50's.

It is with regret that we are selling 300 shares at today's market open of our current Retirement Portfolio holding - British Petroleum and using the proceeds to buy 150 shares of ExxonMobil. BP is an excellent International oil company with a great current dividend. The tragic disaster on  the Transocean oil rig in the deep waters of the gulf could have happened to any oil company in the industry at any time.

However, the huge oil spill in the Gulf of Mexico will surely compromise the growth of BP for at least the next decade. There will be law suits, penalties and clean up costs in the tens of billions of dollars.   In addition, political pressure in the United States over the oil spill will greatly reduce or suspend the generous BP dividend in the months ahead.  

So, the recent decline in the share price of ExxonMobil has presented us with an opportunity to switch into the worlds largest and safest oil company at a great price and as shareholders leave the problems of the Gulf disaster behind. BP is a great lesson in the inherent risks involved in owning any common stock. 

Looking forward, ExxonMobil's stock price and relative dividend growth rate should appreciate much faster than BP in the years ahead. As a result, we are selling 300 shares of BP and buying 150 shares of XOM at the market this morning in the Retirement Portfolio. Recent events have convinced us that ExxonMobil is the energy stock to own.

(Also, due to the recent sharp market correction, we are also cancelling all good to cancel open orders to sell or buy for the Retirement and Growth Portfolios holdings this morning.) (Please do your own due diligence prior to investing. Members of eWorldvu may have long positions on XOM.)

http://www.eworldvu.com

Update on Tuesday, June 8, 2010 at 11:55AM by Jim Smith

Stock transactions made at open. 300 shares of BP sold at $35.83. 150 shares of XOM bought at $59.62