07-14-2015, 02:54 PM
(07-14-2015, 01:55 PM)EricL Wrote:(07-14-2015, 12:28 PM)stewardinlife Wrote: Quick question as I am planning on purchasing CVX and/or XOM.
I read the articles here and seems both of them are good companies to have.
I have 4K that I want to put towards. Is it better to go for one of them, CVX maybe, due to good div. or get both of them. The price entry still seems to be good for both of them. S&P reports CVX is a buy and XOM is a hold. However, M* indicates 4 *s.
Any preferences? And is the price going to go down further much later on?
Thanks.
XOM is the stronger company with an AAA credit rating and plenty of coverage for the dividend as they recently raised it. I believe the company is also continuing to repurchase shares during the current downturn.
CVX is also a very strong company with AA credit, yet has some huge capital projects going on right now and is in a bit of a cash crunch and as a result has suspended its buyback program and recently paid the same dividend for the 5th consecutive quarter. Long term I expect the company to weather the downturn, but if low oil prices persist the dividend could be frozen for a while.
They are probably the two safest picks in the oil sector but XOM is the stronger of the two which is why its yield is lower right now. If you have faith that oil prices will eventually head higher, now would be a decent time to buy.
There's no guarantee what will happen in the next 6-12 months as crude prices could stay low, but long term I've placed my bets on a recovery and own both.
Great. Thanks Eric.