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Miles Gomez
Miles Gomez

Buy Exxon Stock Direct



Hindsight is perfect in investing, since you know exactly what happened and can cherry-pick the best time to buy and sell stocks. And while you have to be careful about backtesting investment approaches because of this, a knowledge of history can provide some guidance for the future. Which is why there's a valuable takeaway from looking at how much money investors would have today if they bought energy giant ExxonMobil (XOM 0.15%) in March 2020.




buy exxon stock direct



To be fair, things got worse before they got better, so this wasn't the "best" time to buy, considering that Exxon's dividend yield actually spiked over 10% at one point. And since yield and price move in opposite directions, that means the stock fell even lower than where it was on March 1, 2020. Still, the upshot here is that it looks like it would have been better to buy deeply out-of-favor Exxon during the worst of the pandemic downturn than to buy the S&P 500 index.


It would have taken massive fortitude to buy any energy stock in 2020, given the global backdrop. And, as noted already, the dates here are cherry-picked to some degree. But the takeaway is still important for long-term investors. First, the energy sector is cyclical and always has been. When the economy is strong, oil and natural gas prices are usually pretty strong, and often even high. That flows through to the top and bottom lines of a company like Exxon. When the economy is weak, the opposite is true. This isn't a perfect correlation, of course, but the ups and down in the oil business are a normal state of affairs. And that means that when energy stocks are out of favor it can be a good time to buy, even if the world economy is in a tenuous state.


Is Exxon the best oil investment you can possibly make? Maybe, maybe not. Peer Chevron, for example, shares a lot of similarities and is actually in a better position industry-wise right now. The real goal of this exercise is to highlight that energy stocks, like Exxon -- which is one of the most recognized energy names on the planet -- are often cheapest when things look the worst. And that's when astute investors will consider stepping into the industry's strongest names. Buying when everyone else is jumping aboard (like today), well, that's easier to do but may not be quite as profitable.


Oil options are another way to buy oil. Options contracts give the buyer or seller the option to trade oil on a future date. If you choose to buy futures or options directly in oil, you will need to trade them on a commodities exchange.


Whether purchasing Bank of America Corporation stock for the first time or enrolling your existing holdings, the Bank of America Corporation Investment Plan is a convenient, cost-effective method to invest in shares of Bank of America's common stock and to reinvest cash dividends. For information and a brochure on this plan, please call Computershare Trust Company, N.A. or view online at the Investor Center.


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DRIPs are ''direct purchase'' and ''dividend reinvestment plans'' -- not the costly drips plumbers deal with. DRIPs are offered by many of the largest blue-chip public corporations in the United States. Being a member of a DRIP stock-ownership plan can add up to substantial savings on broker's commissions while also letting you hobnob with the movers and shakers of Wall Street. And being part of a ''DRIP'' is usually as simple as picking up the telephone and dialing an 800 number.


Some 23 major corporations will let you buy their stock directly, without having to go though an investment house or discount broker, and thus save money on broker's fees. You just need to call the company.


If you already have shares in a company, more than 800 firms will let you reinvest your dividends and buy additional shares, including fractional shares, by dealing directly with the company. Once you own stock in companies providing reinvestment of dividends, you may even be able to send in cash payments to buy additional shares -- again, totally bypassing a broker.


One direct purchase example: Exxon Corporation. By calling 1-800-252-1800 one can talk directly to an Exxon ''shareholder'' representative. The representative asks for your name and mailing address. Exxon then mails you forms to enter their stock program. You must return the documents, along with a check for $250. Once you've done that, you will be enrolled, and you'll also be an Exxon shareholder. You can make subsequent purchases with a minimum of $50, according to Jeff Gabriel, an Exxon representative.


Other direct purchase account choices include: Barnett Bank, based in Florida, with a minimum payment of $250; Texaco, $250; Tenneco, $500; Mobil, $250; Morton International, $1,000; US West, $300. Companies that allow you to acquire new shares through a reinvestment of dividends include AT&T, the Baby Bell regional phone carriers, and McDonald's Corporation.


Being in a direct purchase plan or dividend reinvestment plan is particularly appealing to people ''who want control over their investments,'' and don't like ''having to depend on an outside adviser or mutual fund,'' says Sumie Kinoshita, editor of several directories on DRIPs published by Evergreen Enterprises in Laurel, Md. Not only can you better monitor your individual stock holdings, Ms. Kinoshita says, but ''you can actually talk to company officials, you get annual reports, and you can even attend your company's annual meeting if you want.''


The downside of such plans, experts say, is that one can't time purchases and sales as well as by going through a broker. Thus, a company may have particular days on which it buys or sells stock for its plan. On a selling day, for example, the price-per-share may have fallen sharply, thus reducing profits.


Ownership of shares can be handled through ''book-entry'' registration, which means that a person doesn't have to p