In this article, the author discusses their decision to sell Exxon stock and invest in Canadian Natural Resources (CNQ) due to the higher distribution yield offered by the latter. The author highlights that despite Exxon’s strong dividend history and solid financials, they were attracted to CNQ’s dividend yield of 12% and the potential for capital appreciation.
h2: Selling Exxon and Buying Canadian Natural Resources
The author begins by explaining their rationale behind selling Exxon stock. They acknowledge that Exxon is a well-established company with a solid track record of dividend payments. However, they were enticed by the distribution yield offered by CNQ, which was significantly higher than Exxon’s.
h2: Comparing the Dividend Yields
The author provides a comparison of the dividend yields of Exxon and CNQ. Exxon’s dividend yield stood at around 6.5%, which while respectable, pales in comparison to CNQ’s 12% yield. The author emphasizes that such a high yield is rare and reinforces their belief that it presents a lucrative investment opportunity.
h2: Analyzing the Risks
While the author recognizes the potential risks associated with CNQ, they believe that the risks are sufficiently priced in and outweighed by the potential rewards. They mention that CNQ operates in a stable energy jurisdiction, has strong financials, and a diverse portfolio of assets. These factors mitigate some of the risks associated with investing in the energy sector.
h2: The Potential for Capital Appreciation
In addition to the attractive distribution yield, the author also highlights the potential for capital appreciation with CNQ. They note that CNQ has a solid growth strategy, with plans to increase production and expand its asset base. The author believes that these growth prospects will positively impact the stock price in the long term.
h2: Conclusion
In conclusion, the author justifies their decision to sell Exxon stock and invest in CNQ based on the higher distribution yield and the potential for capital appreciation. They acknowledge the risks associated with CNQ but believe that the rewards outweigh them. The author advises readers to carefully analyze their risk tolerance and investment goals before making any investment decisions.
Overall, the article provides an insight into the author’s investment strategy and their reasons for choosing CNQ over Exxon. It highlights the importance of considering factors beyond dividend history and financials when making investment decisions and emphasizes the potential benefits of diversification within the energy sector.