Based on the article, here’s a summary of why three billionaire investors are currently betting big on energy stocks:
1. Chevron (CVX):
– Warren Buffett, known for his successful investments, added to his position in Chevron in 2023, indicating confidence in the company.
– Chevron provides broad exposure to the energy sector with operations in upstream, midstream, and downstream segments, which provides balance during volatile cycles and allows management to direct investment where it is needed.
– Chevron has a globally diversified portfolio and a history of annual dividend increases for 38 years, which is better than European peers.
– Chevron’s debt-to-equity ratio is lower than its peers, providing more leeway to manage the business and dividend during downturns.
– The current yield of 4% is higher than ExxonMobil’s (XOM), making it an attractive choice for conservative dividend investors.
2. ExxonMobil (XOM):
– Ray Dalio, a renowned investor, recently bought hand over fist of ExxonMobil shares, indicating potential growth opportunities.
– ExxonMobil has a solid balance sheet, a 41-year history of dividend increases, and recently acquired Pioneer Natural Resources, doubling its footprint in the Permian Basin.
– ExxonMobil expects its upstream earnings to more than double by 2027 compared to 2019, leading to larger dividends for investors.
3. Western Midstream (WES):
– Bill Gross, a prominent bond investor, named Western Midstream as his favorite pipeline master limited partnership (MLP) due to its high distribution yield, which is almost 10%, and its potential for tax-deferred income.
– Western Midstream ramped up its distribution payments in 2021 following a portfolio expansion and asset sale, with plans to repay debt and increase the distribution even further in 2021.
– However, MLPs come with certain tax implications that investors should understand before investing.
Overall, these three energy stocks offer various benefits such as broad exposure, dividend increasing history, solid balance sheets, and potential for growth, making them worth considering for investors. However, it’s essential to do thorough research and consult with financial professionals before making any investment decisions.
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