Warren Buffett, CEO of Berkshire Hathaway, is known for his excellent investment vision. The stocks he holds are often highly watched by the market, and the energy industry is currently showing a polarized trend. Buffett holds two very different stocks in this field: Occidental Petroleum (OXY) and Chevron (CVX). Which one is more worthy of investors’ attention?
Berkshire operates similarly to a mutual fund. Buffett usually does not interfere with the daily operations of the companies he invests in, but holds high-quality assets for a long time. His investment strategy emphasizes attractive valuations and long-term growth potential. Therefore, when referring to Buffett’s holdings, investors need to combine their own risk preferences and investment goals.
The story of Occidental Petroleum (OXY) is quite dramatic. In 2019, Buffett helped Occidental Petroleum beat Chevron and successfully acquired Anadarko Petroleum. However, the COVID-19 pandemic caused oil prices to plummet, and high leverage forced Occidental Petroleum to cut dividends, which have not recovered to this day.
In recent years, as its financial situation has improved, Occidental Petroleum has actively promoted business growth and made a number of acquisitions. The stock is suitable for aggressive investors who are willing to take higher risks in exchange for potential share price increases and industry recovery dividends.
In contrast, Chevron (CVX) has demonstrated strong risk resistance. Even in extreme environments such as the 2020 oil price crash and the 2008 financial crisis, Chevron has increased its dividends for 38 consecutive years, becoming one of the most reliable dividend stocks in the energy industry.
Chevron’s success stems from two major advantages. The first is the layout of the entire industrial chain, covering upstream exploration to downstream sales, and can flexibly adjust its business to optimize long-term returns. The second is a strong balance sheet: it can still maintain operations and dividend payments during the economic downturn, and quickly reduce leverage after the industry recovers.
Currently, due to weak energy prices, Chevron’s stock price is under pressure, and the dividend yield has risen to about 5%, providing a good entry opportunity for long-term investors.
