Big Oil

Invest in the biggest players in the oil & gas industry.

Total primary energy demand is forecast to increase by over 40% in the period to 2040 to reach 382 million barrels of oil equivalent per day.

Analysts forecast a turnaround for integrated oil suggesting by 2019 the current ROE of 5-6% could expand to 10-11%.

World oil production is currently at 97.2 million barrels a day (up from 85.6 million barrels a day in 2007.

Natural gas has overtaken coal as the leading generator of electricity in the U.S. contributing 34% of the nation’s output compared to 30% for coal.

Oil and gas are arguably two of the most important commodities to monitor. The world depends on oil and gas to power its economies, and even with the rise of renewable energy, demand for oil and gas does not seem to be slowing down anytime soon. Investing in the Big Oil Vue is attractive for three key reasons:

High dividend yield: The Vue includes large integrated oil companies. These global enterprises have decades of experience operating in innumerable economic, geographic, and pricing environments. They also tend to pay out hefty dividends to shareholders. The average running yield of Chevron (NYSE: CVX), BP (LON: BP), and Total (EPA: FP) is 5.9%.

Growth: Exploration and production companies in the Vue complement the total return profile (dividends & capital appreciation) of the word’s largest oil companies, while the oil service companies are very growth oriented.

Recovering industry & oil prices: The outlook for the oil & gas industry is favourable and improving. Oil prices have recovered from its lows of early 2015, and the companies are in much better shape with healthier balance sheets and improved dividend coverage. Recent 2016 3Q earnings report support the turnaround strategy remains on course and there is potential for the group to improve to > 8% ROE in 2017.

The recently released Big Oil Vue has been carefully constructed by our Equity Research Team after scouring the globe for the best-performing stocks. To learn more about the stocks in the Vue, login to your account or sign up for a free trial.

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