Is it a good time to get into dividend paying oil companies?

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nooby_mcnoob

Many of my children's elite school friends' parents are now into hybrid but few have gone full electric except for the over-indebted, low testosterone people who have Teslas.

Oil price is pummelling related stocks, Trump is putting pressure on allies to reduce oil prices, but just like other government interventions, it can't last indefinitely.

Do I know the difference between WTI crude and Brent crude? No. But ~45% of the US use of oil is for transportation. Even if it is going to 0 in 30 years, that's still a long ass time to pay dividends.

Thoughts?
 
nooby_mcnoob said:
Many of my children's elite school friends' parents are now into hybrid but few have gone full electric except for the over-indebted, low testosterone people who have Teslas.

Oil price is pummelling related stocks, Trump is putting pressure on allies to reduce oil prices, but just like other government interventions, it can't last indefinitely.

Do I know the difference between WTI crude and Brent crude? No. But ~45% of the US use of oil is for transportation. Even if it is going to 0 in 30 years, that's still a long ass time to pay dividends.

Thoughts?
More...

Crude and natural gas are cheap relative to most other energy sources. Crude still would have widespread utility at $200 to $300 per barrel in my opinion.

However, if the global economy slows down, energy demand and prices are likely to fall along with stock prices. Large multinational oil companies such as XOM and CVX are considered conservative stocks and pay an ok dividend. If the energy market outlook was bullish, the more speculative pure oil exploration plays such as HAL or SLB might provide higher overall returns.

I would avoid making a large commitment to this sector at this time. Lower stocks prices or better clarity is likely as we go forward.
 
Why would you buy when everyone expects it to do well? I mean, if you're trying to do well, better to invest when everyone thinks it's a terrible investment when the fundamental reasons haven't yet changed.
 
I more or less agree with your longer-term thesis, but it feels early to me from a cycle perspective. Oil has only been going down for a few weeks, so the sector is hardly beaten down, out-of-favor etc. It may of course just be a pullback in the longer-term uptrend, but in the relatively near future you'll be running into concerns about rising rates and a business cycle turn - and these concerns may be why oil (and stocks) are under pressure already.

In the longer term there's going to be a role for oil for years to come, but at the end of the day the Western majors are stuck as relatively high-cost producers in a declining industry. Making money in oil going forward means getting the cycle right, as well as some fundamental analysis to separate those players managing the transition well versus those who aren't. All just IMO.
 
Specterx said:
... Oil has only been going down for a few weeks, so the sector is hardly beaten down, out-of-favor etc...
More...

Check your charts again; oil (notably WTI) has been going down since Oct 3rd, like the rest of the major equities. The last time it was at the Oct 3rd closing price was almost exactly 4 years ago, and it took only a month back then to drop $25 per barrel. This time it took about 2 months. WTI (and all of oil) are back in the throes of headache-induced uncertainty.
 
nooby_mcnoob said:
Many of my children's elite school friends' parents are now into hybrid but few have gone full electric except for the over-indebted, low testosterone people who have Teslas.

Oil price is pummelling related stocks, Trump is putting pressure on allies to reduce oil prices, but just like other government interventions, it can't last indefinitely.

Do I know the difference between WTI crude and Brent crude? No. But ~45% of the US use of oil is for transportation. Even if it is going to 0 in 30 years, that's still a long ass time to pay dividends.

Thoughts?
More...
%%
Good dividend$, for example CVX, XOM.In 2008 the oil companies held up a bit, before they went down. XOM hit $55 area in 2008; then the elephants did an uptrend stampede.LOL[ If you do]may want to, in 2 or 3 positions with YTD+ yearly chart s down . They will most likely take out 52 week lows again + again. Good volume in XOM, CVX; so XOM held up much better than SPY benchmark, 2008. NOT a prediction:D:D
 
I'm willing to take a little bit of a hit (50%) if it's similar to 2008, but I don't think it will be. I think it will be a slow economic decline at which point the dividends will cushion the blow a bit. I haven't heard or seen of any major 2008-style catalyst unless... unless... The US cannot get enough people to buy the bonds in a couple of years? That would be exciting.
 
nooby_mcnoob said:
Many of my children's elite school friends' parents are now into hybrid but few have gone full electric except for the over-indebted, low testosterone people who have Teslas.

Oil price is pummelling related stocks, Trump is putting pressure on allies to reduce oil prices, but just like other government interventions, it can't last indefinitely.

Do I know the difference between WTI crude and Brent crude? No. But ~45% of the US use of oil is for transportation. Even if it is going to 0 in 30 years, that's still a long ass time to pay dividends.

Thoughts?
More...


This may be relevant information for you.

https://insight.factset.com/as-pric...sfZrrtmxTfp_yEnZqyqS1Kl3mdJ01Q&_hsmi=67804076
AS PRICE OF OIL FALLS, ARE ANALYSTS TOO OPTIMISTIC ON ENERGY EARNINGS FOR 2019?
COMPANIES AND EARNINGS

By John Butters | November 26, 2018

As of today, the Energy sector is projected to report the highest earnings growth of all 11 sectors in the S&P 500 in 2019 at 24.3%. This sector also currently has the highest percentage of Buy ratings (63%) of all 11 sectors in the index and is projected to see the largest increase in price (+28.9%) over the next 12 months (based on the bottom-up target price). Based on these estimates, industry analysts are clearly optimistic on the Energy sector.

The forward 12-month EPS estimate for the S&P 500 Energy sector has increased by 6.5% since September 30, which is the largest increase of all 11 sectors in the S&P 500. However, it should be noted that forward earnings estimates for the Energy sector and the price of oil are highly correlated. Over the past 20 years, the correlation coefficient between the daily forward 12-month EPS estimate for the Energy sector and the daily price of oil (WTI) is 0.92

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