Exxon Mobil Corporation (XOM) is one of the most stable energy companies, with a large diversification, trading at a reasonable valuation, and it offers downside protection through the sale of options, says Kirk Mentzer, Senior Vice President and Director of Research at Huntington Private Financial Group.
“I’m not going to move the market in Exxon. The idea here is that the valuations look reasonable, and they have a bias toward natural gas. Natural gas prices are just now starting to pick up a little bit. The play here is their diversification in the energy markets. They have been one of the most steady energy companies. When I’m looking at the process of going through the quantitative measures, the yield is about 2.8%, and it’s just a good, steady player and high quality,” Mentzer said.
FOR MORE INFORMATION ABOUT THIS INTERVIEW CLICK HERE.
Mentzer says he can add value to his XOM ownership through the use of cover call options. He says he can add value this way, and he uses this strategy to gain some incremental return.
“The dividend’s only $0.63 a share; if I can gain a couple dollars on an option, wait that out for a couple of months, maybe I pick up another dividend, and if the stock just stays where it’s at, I still come out ahead. If it drops, then I keep the option income. It’s really capital, but I look at it as additional return for the shareholder,” Mentzer said.
Exxon Mobil Corporation (XOM) Holds Best Assets and Trades Below Appraised Fair Value
April 03, 2013
Chevron Corporation (CVX) and Exxon Mobil Corporation (XOM) Show Dividend Growth Rates Up to 12%
July 08, 2013
Chevron Corporation (NYSE:CVX), Exxon Mobil Corporation (NYSE:XOM) Set to Weather the Pricing Storm
February 22, 2016
Exxon Mobil Corporation (XOM) Outperforms Peers When Oil Prices Decline
January 04, 2013
Exxon Mobil Corporation (NYSE:XOM) Earning Its Cost of Capital to Pay Dividends
October 13, 2016
