Analyzing the competition
Exxon Mobil Corporation (NYSE:XOM) is currently trading with a P/E ratio of around 9. Gains have been good for Exxon in the past several years–It has gained 50% in the past 8 years alone. The strong performance is most likely because Exxon has had a very stable growth track record. Exxon Mobil Corporation (NYSE:XOM)’s EPS has grown by almost 70% over the past seven years. The dividend yield would appear to be lower than Total. It is around 2.7%, but this is when you don’t factor stock repurchasing into the equation. However, Exxon repurchases stock every year, which puts the effective dividend at 7%. The two companies have slightly different strategies. Total focuses on continuous cash flow generation and increasing cash on hand, while Exxon is more focused on long-term strategies for growth.
Chevron Corporation (NYSE:CVX) is another key player in the industry. It is worth $243 billion and has a diversified business, with upstream process and downstream processing in many different regions. Chevron is in additional sectors as well, including molybdenum and coal mining. Chevron’s EPS is around $13.5, and the yield is close to 3.2%. Like Exxon, Chevron Corporation (NYSE:CVX) is also focused on a long-term growth strategy. It has a large amount of cash on hand ($46 billion), which will help it make acquisitions and expand. The profit margin (mid-teens) and the operation margin (high-teens) have been steadily improving since 2008. Chevron’s financials remain stable, which gives its stock a positive future outlook.
The bottom line
If you are looking for a stock that is a good value and has a high dividend yield, Total’s stock is one of the best you will find in the industry. Exxon and Chevron are both very stable and generally good investments. However, Total might be a great addition to your portfolio, since the company has a slightly different business strategy.
If you are interested in TOTAL S.A. (ADR) (NYSE:TOT) stock, now is a great time to buy. The price has temporarily decreased after a spill of natural gas in the North Sea. However, there is no doubt that the stock will soon recover. For these reasons, I recommend that investors buy Total stock if they are looking to buy stock in the energy sector.
The article An Oil Giant With a Super Dividend originally appeared on Fool.com and is written by Nauman Aly.
Nauman Aly has no position in any stocks mentioned. The Motley Fool recommends Chevron and Total SA. (ADR). Nauman 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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