What Buffett Likes About OXY Stock Is Clear

It is well known that Warren Buffett favors a select few stocks, and Occidental Petroleum (NYSE: OXY) is one of his well-known favorites. We rate Occidental Petroleum highly because of its excellent value, reliable dividends, and potent energy output, much like the Oracle of Omaha.

The mission of Occidental Petroleum is dual. Occidental’s mission statement includes helping to create a “net-zero future” as well as “reliable energy now.” But why is the energy required right now?

It’s because the United States and other free countries want to be independent of occasionally amicable petroleum-producing nations. As America strives for energy independence, Occidental Petroleum is a problem-solver with everything a Buffett-style investor could desire.

What Makes OXY Stock Great?

If you’re like Buffett, you’re always searching for the best deal. Since Occidental Petroleum’s trailing 12-month price-to-earnings (P/E) ratio is at 5.29x, it precisely fits that description.

Occidental Petroleum’s shareholders have profited in 2022 despite a slump in the overall market. However, since any logical valuation metric doesn’t overbuy the shares, it’s still not too late to buy. Additionally, long-term investors are eligible to receive dividend payments. The projected annual dividend yield for Occidental is 0.81%.

We are now beginning to understand why Buffett might choose OXY stock. If you’re unsure about the security of those dividend payments, think about this. Occidental Petroleum produced a staggering $2.5 billion in net income in the third quarter of this year.

Advertisement

In other words, Occidental has a variety of revenue sources and shouldn’t have any trouble keeping up its dividend payments.

Energy Crises May Be Beneficial for OXY Stock

Is a crisis in energy on the horizon? Faisal Humayun has chosen OXY stock as a top investment because he is preparing for the potential of a shortage in the petroleum supply. Nobody wants an oil catastrophe, but Humayun is absolutely correct to view Occidental Petroleum shares as a good investment given the current international unrest.

Occidental Petroleum is the only American oil company that can be relied upon to step up to the plate. The business produced 1.18 million barrels of oil equivalent per day in the third quarter of 2022. (Mboed). Occidental said that this outcome “exceeded the midpoint of guidance by 25 Mboed.”

This outcome is opportune because OPEC+ hasn’t been as cooperative as the United States and other countries would want. The Organization of Petroleum Exporting Countries (OPEC) and Russia are both members of OPEC+. The organization decided to cut its daily oil production by 2 million barrels in October.

The output reduction is scheduled to continue through the end of 2023. OPEC+ confirmed its dedication to that output decrease at the beginning of December. A worldwide energy crisis is thus a real prospect in the months and years to come. It is obvious that Occidental Petroleum’s high-volume domestic production is timely given the current importance given to America’s energy security.

Steps You Can Take Now

We now know what Buffett most likely perceives in Occidental Petroleum. There is a strong value proposition as well as consistent dividend payments. But there’s more to this tale than meets the eye.

Advertisement

America’s energy independence and security are at risk. Even if they’re dedicated to a net-zero future, domestic drillers must step up and start producing oil right away, and Occidental Petroleum is doing just that. So feel free to invest in OXY stock like Buffett did to secure American energy independence and an excellent deal.

For More Financial News, Click Here.