Investors are always looking for the next big opportunity in the stock market, and with the S&P 500 and Nasdaq-100 reaching new heights, some may argue that greed is starting to take over. However, one investor is taking a different approach by following Warren Buffett’s advice to be fearful when others are greedy and greedy when others are fearful.
In a recent move, this investor decided to purchase shares of ExxonMobil (NYSE: XOM), a high-yield dividend stock that meets their stringent criteria. Here are three reasons why they made this bold investment:
1. An attractive valuation: While the overall market may be trading at a premium, ExxonMobil stands out with a low forward earnings multiple of 11.7, compared to the S&P 500’s 21.3. This makes the oil and gas giant a compelling value play in a market where valuations are soaring.
2. A fantastic dividend: ExxonMobil offers a dividend yield of nearly 3.5% and has a track record of increasing its dividend for 41 consecutive years. With a low payout ratio of 41%, the company is well-positioned to continue rewarding shareholders with steady income.
3. A potentially massive growth opportunity: With predictions of an impending oil shortage and a growing market for carbon capture technology, ExxonMobil has significant growth potential in the years to come. The company’s investments in carbon capture could position it as a key player in a $4 trillion market by 2050.
By checking off all the boxes for value, income, and growth, ExxonMobil has become an attractive investment opportunity for this investor. While they remain cautious and have only allocated a small portion of their portfolio to the stock, they see the potential for solid returns in the long run.
Whether or not ExxonMobil is the right investment for you, it’s always important to do your own research and consider all factors before making a decision. As Warren Buffett famously said, “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”
