Exxon Mobil Corporation (XOM), Chevron Corporation (CVX): These Oil Majors Can Net You Major Profits Over the Long Haul

The Extreme Make Over

ConocoPhillips (NYSE:COP) is looking a bit different these days compared to a couple years ago. In May of 2012, it spun off its downstream (oil refining) operations to become the largest pure play exploration and production oil company in the world. In addition to this, ConocoPhillips (NYSE:COP) is also parting ways with assets with low margin and areas of high political volatility. It is using the proceeds of these asset sales to start ventures in areas that will provide higher margin, and less chance of government regulation. This strategy has already paid off in the early going as it announced a significant discovery in the deep water gulf of Mexico this year. Management has recently reiterated that their restructuring plans are on track, and that it is committed to providing top notch shareholder returns. Its dividend is currently 45% of their earnings per share, which isn’t excessive, but provides a juicy 4.45% yield at current prices. This is a nice reward while waiting for the new business ventures that ConocoPhillips (NYSE:COP) undertakes to come online. Management expects these business ventures to boost oil production and margin 3%-5% annually for the next handful of years.

The Foolish Bottom Line

Each of these three companies have a variety of strengths and weaknesses. However, all three can be considered very strong additions to your portfolio due to the strong positions they hold in an industry that is such an important piece of society and is going nowhere any time soon. “Big Oil” can sometimes be overlooked due the tendency of the companies to move slowly price wise. Any investor who buys these three fine companies and tucks them away in a safe place such as a Roth IRA will look very smart 5, 10, or 20 years from now.

The article These Oil Majors Can Net You Major Profits Over the Long Haul originally appeared on Fool.com and is written by Justin Pope.

Justin Pope owns shares of ConocoPhillips. The Motley Fool recommends Chevron. Justin is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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