Occidental Petroleum(NYSE: OXY) stock has gained immense popularity among energy investors within a couple of years or so, and much of the credit goes to Warren Buffett. The legendary investor has been a consistent buyer of the oil and gas stock and now owns a significant stake in it through his company, Berkshire Hathaway. As of June 30, Berkshire owned a 28.8% stake in Occidental Petroleum.
With reinvested dividends, Occidental Petroleum stock has nearly doubled investors' money in just the past three years. However, the stock has fallen considerably in recent months, giving energy investors a great opportunity to buy. You could even earn $1,000 in annual dividend income if you invest in the oil and gas stock now. Here's how.
Occidental Petroleum increased its dividend by 22% in early 2024 and last paid a quarterly dividend of $0.22 per share. That amounts to an annualized dividend of $0.88 a share. At the stock's current price of roughly $52.45 apiece, you can earn an annual dividend income of just over $1,000 if you buy 1,140 shares, or invest around $59,800 in Occidental Petroleum stock now.
That may seem like a big investment, but Occidental Petroleum stock should have strong upside from here given its growth plans.
Buy and hold Occidental Petroleum stock
Occidental Petroleum acquired CrownRock in August for roughly $12 billion. The deal has expanded Occidental's footprint in the Midland basin and is expected to be immediately accretive to its cash flows. To top that, Occidental Petroleum expects to raise $4.5 billion to $6 billion by selling some of the acquired assets and use the proceeds to pare down debt.
That should significantly strengthen Occidental Petroleum's balance sheet, giving it more room to invest in its oil and gas, chemicals, and low-carbon businesses while growing its dividends over time. With the stock also down more than 12% this year, it's a great buy.
Should you invest $1,000 in Occidental Petroleum right now?
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Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway. The Motley Fool recommends Occidental Petroleum. The Motley Fool has a disclosure policy.
