Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products. Note that Exxon has one of the highest paid American CEOs.
The company reported better third-quarter results that did have some positive trends, and the Merrill Lynch team noted this in a report:
ExxonMobil’s third quarter is underlined by momentum towards a target to double cash-flow by 2025 with visible growth in exploration and production leading the way. Project execution remains strong while peer leading balance sheet allows for countercyclical investment at advantaged costs. With asset sales set to close any deficit in cash-flow, the company’s strategy clears the way for future rateable dividend growth.
The company raised its dividend earlier this year by a nickel per share to $0.87. That now translates to a solid 4.87% dividend.
Merrill Lynch has a price objective of $100, while the posted consensus target price is much lower at $79.27. The stock closed most recently at $71.49 a share.
This energy company made huge news earlier this year with a Warren Buffett backed purchase of Anadarko Petroleum. Occidental Petroleum Corp. (NYSE: OXY) is an oil-levered multinational organization with principal business segments in oil and gas and in chemicals.
The oil and gas segment explores for, develops, produces and markets crude oil and natural gas, primarily in the U.S. Permian Basin, Colombia, Bolivia, Libya, Oman, Qatar and Yemen. Meanwhile, the chemicals segment manufactures and markets basic chemicals, vinyls and performance chemicals.
The shares have underperformed since the Anadarko acquisition was announced, but the investment case anchored by yield has not changed. With a rock-solid balance sheet and a commitment to dividend coverage, investors look safe for now. The Merrill Lynch analysts noted this when the company reported its third-quarter results:
A messy quarter was expected with all the moving parts around the Anadarko integration, but underlying cash-flow remained solid. 2020 capital expenditures lowered significantly with minimal production growth; Occidental looks to prioritize deleveraging over any growth. We see de-rating overdone, with catalysts to reset absolute yield on simple execution already in motion through the third quarter.
Shareholders of Occidental receive a massive 7.98% dividend. The huge $80 Merrill Lynch price target is well above the posted consensus target last seen at $52.84. The stock closed trading at $39.16 on Wednesday.
These three domestic oil giants all make sense for total return accounts. The large dividends that each pays will help investors should the sector stay flat in the near term. Note that all these stocks are at some of the best entry prices in years, and they could offer big-time upside in 2020 if crude prices do indeed take off.
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