Exxon Mobil Corporation (XOM): One of the Best Long-Term Investments There Is

Alternatives

There are many big oil companies, but I wholeheartedly believe that Exxon Mobil Corporation (NYSE:XOM) is the best for a long-term investment. For comparison sake, I’d like to take a quick look at two other favorites of mine, Chevron Corporation (NYSE:CVX) and BP plc (ADR) (NYSE:BP).

Chevron is the second largest U.S. oil company and the fifth largest publicly traded oil company in the world, with production of approximately 2.6 million barrels per day. Chevron pays a slightly higher dividend yield than Exxon Mobil (3%) and also raises its dividend like clockwork. The main reason I prefer Exxon Mobil is their more aggressive plans to expand capacity. In contrast, Chevron is targeting production growth of 1% annually through the end of 2014, and 4-5% in 2014-2017. As mentioned before, Exxon is planning to add 1 million boe/day of capacity by 206, which would be over a 15% increase from current levels.

BP, like Exxon Mobil Corporation (NYSE:XOM), does have aggressive expansion plans; however there are a few red flags when it comes to its long-term investability. First, I would not consider putting my savings into BP until the Deepwater Horizon mess is completely behind them. I realize that the company has fulfilled most of its financial obligation, however certain aspects of the catastrophe still linger.

Also, the company has the most debt on its balance sheet of any of the three profiled here. While Exxon Mobil and Chevron both have positive net cash positions (more cash than debt), BP has $20 billion in cash and almost $49 billion in debt on its balance sheet. I would like to see measures in place to reduce the debt before investing.

Conclusion

While I would call all three of these companies “good” investments, Exxon Mobil has proven itself to be a great one. Its track record of consistent growth and shareholder-friendly practices (like its share buyback) is unmatched. With the rising demand for energy, oil and gas prices aren’t going to have a sustained drop anytime soon, and the profits of Exxon Mobil should rise right along with it.

The article One of the Best Long-Term Investments There Is originally appeared on Fool.com.

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