Oil Surge Predicted… But Are You Ready?
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Do you own oil and gas stocks? Or are you thinking about buying some? If so, you need to see this. I just revealed my #1 way to profit from oil in 2023. But it's NOT oil stocks, futures, or anything you've likely heard about. Rather, it's an usual way to potentially bank huge monthly income from the oil and gas markets. It's a secret so powerful that one man used it to turn a single $1,000 investment into a $100,000 income stream for over fifty years! All the details are right here:
Below is a transcript of a recent video with Chief Income Strategist Marc Lichtenfeld
Hi everyone, I'm Marc Lichtenfeld, Chief Income Strategist with the Oxford Club, if you know anything about me, I am all about energy, both in my personal and professional lives.
What does that mean? I'm happily married, I run and hit the gym, I sing in a band, and have an active social life. People often ask me where I get the energy.
I'm not even much of a coffee drinker, if you followed my work for even a little while you know that I am very bullish on energy, the US and global economy are doing well and that increases demand for energy.
And at the same time, the Middle East is a disaster. Russia and Ukraine are still at War and the US strategic petroleum Reserve which is supposed to be filled in case of an emergency sits empty. Plus our good friends at OPEC are committed to production cuts to keep prices high, so demand for energy is high while supply is constricted, demand for oil is so strong that British Petroleum which changed its name to BP and added the sun to its logo to show its transition from a traditional oil company to a company that provides energy from lots of sources is now sinking more cash back into oil production.
I expect oil and oil stocks to do very well in 2024 but not only oil, natural gas is cheap and plentiful, alternative energy like wind and solar continue to come down in price and contribute more to supplying our needs. And as an investor, the great thing about energy companies is most of them generate tons of cash and pay dividends. Giants like Chevron yield more than 4% and pipeline companies often yield 7% or higher and I expect small or independent but cash gushing companies to get acquired by the larger energy companies that need to fuel growth without committing tons of capital into new projects. Investors have made it very clear in the past few years the days of tolerating wasteful spending by energy companies is over, investors expect a return on their investment and they want to see a solid dividend yield to ensure your dividends will keep coming. Look for companies whose payout ratios are 75% or less of their free cash flow now you have to do a little math, free cash flow is simply cash flow from operations minus Capital expenditures to find that you go to a company's statement.
Here's Exxon Mobil’s statement of cash flows, for the first 9 months of 2023, and you can see that net cash provided by operating activities was $ 41.7 billion additions to property plant and Equipment which is another name for Capital expenditures was $ 15.7 billion. So that means free cash flow was $26 billion because 41.7 billion minus 15.7 billion is 26 billion, now we go down to cash dividends paid to shareholders which is $ 11.1 billion.
So Exxon Mobil paid out $ 11.1 billion of its $26 billion in free cash flow or 43% because 11.1 divided by 26 is 0.43, 43%. So in plain English, Exxon Mobil generated $26 billion in free cash flow and paid shareholders 43% of that in dividends, so 75% or lower is the number that I look for is a general rule and that tells me that the company can afford its dividend even if cash flow slips. Some companies like partnerships typically pay 100% of their cash flow in dividends but they're a different animal unless the company has Partners or LP in the name stick to the 75% Rule.
Now, the energy sector is a great place to earn income and ultimately large gains as the planet's thirst for energy is unlikely to decline anytime soon.
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P.S. You could be looking at up to $34,200 in easy, passive income this year (or up to $93 per day). And as you'll discover when you click through… that number is set to get a LOT bigger in the coming years!
