Investors are always looking for the next big opportunity in the stock market, especially during times of high market volatility. With the S&P 500 and Nasdaq-100 reaching record highs, some may argue that greed is driving investment decisions. However, one investor is taking a different approach by following Warren Buffett’s advice to be fearful when others are greedy.
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 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. This is significantly lower than the S&P 500’s forward earnings multiple of 21.3, making ExxonMobil a value play in a potentially overvalued market.
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 dividend payout ratio of 41%, the company is well-positioned to continue rewarding shareholders with consistent dividend hikes.
3. **A potentially massive growth opportunity**: The investor sees significant growth potential for ExxonMobil, especially in the area of carbon capture technology. With the company investing heavily in this sector, they believe ExxonMobil could capitalize on the estimated $4 trillion carbon capture market by 2050. Additionally, with predictions of an impending oil shortage, ExxonMobil’s position as one of the world’s largest oil producers could lead to further growth opportunities.
Overall, the investor believes that ExxonMobil checks off all the boxes for value, income, and growth investors. While they remain cautious and have only allocated a small portion of their portfolio to this stock, they see potential for long-term gains.
As the market continues to fluctuate, it’s important for investors to carefully consider their investment decisions and look for opportunities that align with their investment strategy. In this case, ExxonMobil’s combination of value, income, and growth potential has caught the attention of one savvy investor.
