Warren Buffett, the ‘Oracle of Omaha’, is one of the most renowned investors to ever live. Through judicious stock picks based on a philosophy of value investing, the billionaire and his company, Berkshire Hathaway, have managed to beat the market consistently.
On February 14, Berkshire released its Q4 2024 13-F filing, giving investors a closer look at Buffett’s stock portfolio as of December 31. For the past few quarters, the company has been a net seller of stocks. In addition, the billionaire is sitting on a record-breaking cash position — seemingly preparing for a market-wide pullback that would allow him to mobilize capital more efficiently.
While he has remained bearish on banks and indices, the billionaire isn’t universally bearish. The last quarter of 2024 saw the addition of Constellation Brands stock (NYSE: STZ) to his portfolio — on top of that, Buffett increased his stake in several of his perennial favorites.
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One of the companies that the investor has doubled down on is Occidental Petroleum. Just two months ago, Occidental Petroleum stock (NYSE: OXY) was trading at a 2.5-year low. However, OXY shares saw a 7.56% move to the upside over the past week. At press time, Occidental Petroleum stock was trading at $52.07.
Several bullish factors are at play with Warren Buffett’s favorite energy company — let’s take a closer look at exactly what is happening.
Warren Buffett’s core holding rises on analyst revisions, dividend hike
On February 18, Occidental Petroleum held its Q4 2024 earnings call. Although the results were mixed, they obviously inspired investor confidence. Earnings per share (EPS) came in at $0.80, ahead of the $0.67 consensus forecasts. Revenues of $6.83 billion lagged the average forecast of $7.14 billion.
However, a quarterly report consists of more than just EPS and revenue. Occidental managed to complete its near-term $4.5 billion debt repayment plan. Moreover, the business increased its quarterly dividend by 9%, up to $0.24 per share.
In the immediate aftermath of the report, Mike Scialla, a Stephens & Co. analyst, reiterated a prior ‘Overweight’ rating on the stock. In addition, doubled down on a $71 price target, which implies a 36.35% upside from current prices.
While significantly less bullish, UBS’ Josh Silverstein increased his price forecast for OXY stock from $54 to $56, while maintaining a ‘Neutral’ rating.
Warren Buffett’s first investment in the company came in 2019 — and was worth $10 billion. Its purpose was to aid the acquisition of Anadarko Petroleum. In return, the billionaire received preferred stock — which came with an 8% annual dividend yield. In simple terms, the billionaire can count on a steady stream of income, regardless of how OXY shares perform in terms of price.
Although significantly less appealing, Occidental Petroleum common stock has a dividend yield of 1.69% — at a forward price-to-earnings (PE) ratio of just 16.48, dividend investors who are bargain hunting ought to give this Warren Buffett stock a closer look.
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