It's no secret why this oil-based ETF has fared so well.

A futures ETF?

The BetaShares Crude Oil ETF is a rather unique ASX fund. Rather than holding a portfolio of underlying stocks or bonds, as most ETFs do, it instead offers investors exposure to a portfolio of futures contracts. Futures contracts are derivatives that represent the value of a commodity, to be delivered in the future, at a price determined in the past or present. They are commonly used by both businesses and investors to mitigate risks associated with volatile commodities.

To illustrate, an oil-based futures contract might stipulate that 1,000 barrels of crude oil are to be delivered on 31 December 2026 at a price of US$60 per barrel. If the contract was made when oil prices were at US$60 a barrel, and the oil price rises to US$80 soon after, then that contract's value just increased. Of course, it works the other way as well.

The OOO ETF holds a basket of these contracts. Given the sharp increase in the price of oil this week as a result of the new US-Iran war, it's no surprise to see the value of OOO units rise rapidly in response.

We've also seen other energy-focused ASX ETFs react similarly on the ASX this week. One example is the BetaShares Global Energy Companies Currency Hedged ETF (ASX: FUEL). This ASX ETF doesn't hold futures contracts. Instead, it opts for the traditional ETF model of holding an underlying portfolio of global energy stocks like Chevron, ConocoPhillips, Shell and ExxonMobil. FUEL units have risen by almost 6% over the past month.

Is it too late to buy funds like OOO and FUEL?

Investors might be looking at these gains and wondering whether it's worth jumping on this train.

While it might be tempting to look at what's going on with oil prices and conclude that either OOO or FUEL might be a good way to insulate your ASX share portfolios, I think that would be a mistake.

Oil is a highly volatile commodity at the best of times. But this volatility has reached unprecedented heights over the past week. On any given day now it seems, oil can move by double-digits in either direction. Whilst you might be able to time a trade perfectly to take advantage of one of these upswings, there's just as likely a chance that you can be caught out by a downturn. You may as well go down to the casino and put it all on red.

Further, commodity-specific ETFs like OOO and FUEL tend to charge relatively high management fees and deliver low long-term gains. At least compared to market-wide index funds.

As such, I think ASX investors would be better off finding high-quality companies that compound their earnings every year and buying them at a good price over trying to take advantage of the whipsawing energy prices that we are seeing.

The post Up 30% in a month: Is it too late to buy the BetaShares Crude Oil ETF (OOO)? appeared first on The Motley Fool Australia.

How strong?

Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed on 30 June trading for $23.63. When the closing bell rang on 31 July, those shares were swapping hands for $26.59.

This saw Woodside shares up an impressive 12.5% over the month. That's more than five times the 2.4% gain posted by the ASX 200 in July.

Here's what went right for the ASX 200 oil and gas producer in the past month.

Tailwinds for Woodside shares in July

The 7.3% increase in the oil price was one of the tailwinds helping propel Woodside stock higher in July.

Brent crude oil ended June trading for US$67.61 per barrel and finished July at US$72.53 per barrel, according to data from Bloomberg.

Woodside shares also got a boost on the back of the company's second-quarter update, released on 23 July.

Among the highlights, Woodside reported a 2% quarter-on-quarter increase in production to 50.1 million barrels of oil equivalent (MMboe).

And revenue for the three months to 30 June came in at US$3.28 billion, up 8% year on year.

Amid the strong production and cost controls in the first half of the year that helped boost Woodside shares, the company amended its full calendar year 2025 production and cost guidance.

Management expects full-year production to range from 188MMboe to 195MMboe, from 186MMboe to 196MMboe previously.

Meanwhile, unit production costs were reduced to US$8.00 to US$8.50 per barrel, down from the previous guidance range of US$8.50 to US$9.20 per barrel.

Commenting on the strong production results on the day, Woodside CEO Meg O'Neill said:

As we marked the anniversary in June of first oil from Sangomar, the project's exceptional performance continued to make a strong contribution to quarterly results, with gross production reaching 101 thousand barrels per day at close to 100% reliability

What else happened with the ASX 200 energy stock in July?

Woodside shares also got a lift on 29 July.

That's when the company reported on its "historic agreement" involving the Gippsland Basin Joint Venture with Exxon Mobil Corp (NYSE: XOM).

Under the agreement, Woodside will assume operatorship of the offshore Bass Strait production assets, the Longford Gas Plant, the Long Island Point gas liquids processing facility, and associated pipeline infrastructure.

Woodside said it expects to realise over US$60 million in synergies from the Bass Strait agreement with Exxon after deducting transition and integration costs.

As for August, Woodside shares closed down 0.3% on Friday, trading for $26.52 apiece.

The post How Woodside shares smashed the benchmark returns in July appeared first on The Motley Fool Australia.

Shares in the S&P/ASX 200 Index (ASX: XJO) energy stock closed yesterday trading for $26.19. In morning trade on Tuesday, shares are changing hands for $26.42 apiece, up 0.9%.

For some context, the ASX 200 is down 0.5% at this same time.

Woodside shares should be getting some extra support today with the Brent crude oil price up 2.3% overnight to US$70.04 per barrel. This follows threats from United States President Donald Trump to implement tough new sanctions on oil-rich Russia if the nation doesn't halt its war with Ukraine within 10 to 12 days.

The oil and gas giant also released an update this morning on its Australian operations.

Here's what we learned.

Woodside shares in focus amid ExxonMobil agreement

In an announcement deemed non-price sensitive to Woodside shares, the company reported that it has agreed to assume operatorship of the Bass Strait assets, located offshore Victoria.

Woodside said its "historic agreement" with Exxon Mobil Corp (NYSE: XOM) Australia will open the door for more potential gas developments at Bass Strait. The company said it has identified four potential development wells that could deliver up to 200 petajoules of gas.

Woodside will assume operatorship of the offshore Bass Strait production assets, the Longford Gas Plant, the Long Island Point gas liquids processing facility, and associated pipeline infrastructure. ExxonMobil's and Woodside's equity interests in the assets and current decommissioning plans and provisions remain unchanged.

The ASX 200 energy stock expects the economies of scale achieved by the agreement to realise over US$60 million in synergies from the Bass Strait after deducting transition and integration costs.

What did management say?

Commenting on the agreement that could offer long-term support for Woodside shares, Liz Westcott, Woodside COO Australia, said, "Taking operatorship of Bass Strait demonstrates Woodside's continued commitment to meeting Australia's domestic energy demand while maximising the value of existing infrastructure."

ExxonMobil Australia chair Simon Younger added:

After operating the Gippsland Basin Joint Venture for more than 50 years, we are proud to be handing over the reins and transitioning our highly experienced Bass Strait workforce to our valued partner Woodside, a world-class operator.

The companies aim to complete the agreement in 2026. It remains subject to conditions precedent including obtaining regulatory approvals.

Woodside share price snapshot

After a rough 20 months of selling, commencing in September 2023, Woodside shares took a sharp turn for the better in April.

Year to date, shares are up 5.9%, with the ASX 200 energy stock now up 38.0% since the recent closing lows on 9 April.

The post Buying Woodside shares? Here's the latest move to achieve US$60 million in synergies appeared first on The Motley Fool Australia.

Whilst the news, released yesterday afternoon, wasn't price-sensitive, Fortescue shares finished nearly 2% higher on the day at $17.57 apiece.

However, zooming out, they are down more than 37% in the past year. Let's take a closer look.

What's behind the lawsuit

According to media reports, ExxonMobil started proceedings against several environmental groups in a Texas Court on Monday, alleging defamatory comments were made about its recycling process.

Exxon accuses the Intergenerational Environment Justice Fund (IEJF) of defamation and claims the charity is tied to Forrest's philanthropic foundation, Minderoo. Note that Forrest is not being sued personally, nor are he or Minderoo defendants.

Forrest denies the claims.

The lawsuit alleges that Forrest worked with US environmental groups to disrupt Exxon's advanced plastic recycling initiatives, describing the actions as deliberate "smear campaigns," as The Australian reported.

Meanwhile, according to reporting by the Australian Financial Review, Exxon says the charities were turning "the wheels of American justice to self-interested purposes".

It is also a case about the corrupting influence of foreign money in the American legal system and about the sordid for-profit incentives and outright greed that tries to hide behind so-called public impact litigation.

Low-carbon energy a focus for Fortescue shares

The lawsuit also claims Fortescue is aiming to gain an edge in the highly competitive low-carbon energy market, where both goliaths are innovating heavily.

It alleges that Forrest attempted to pressure plastic resin manufacturers into agreeing to an illegal price levy. As reported by The Nightly:

Undeterred, Forrest continued to promote his campaign to other industry participants, culminating in another meeting among plastic resin manufacturers and major retail brands.

At this meeting, ExxonMobil representatives again explained why Forrest's scheme was unlawful, and those present refused to participate in Minderoo's plan. Undeterred, Forrest publicly launched this campaign at a United Nations sponsored TED Talk in New York in September 2019.

Forrest responded to the claims, stating that the fossil fuel industry was "desperate" to maintain its influence. Per the AFR:

I am personally delighted Exxon has walked themselves into the court and opened themselves up to cross-examination.

The fossil fuel industry is getting increasingly desperate at maintaining its toxic grip on society. My conflict is that I am dedicated to steering the world away from a future reliant on fossil fuels.

Could this impact Fortescue shares?

It's essential to state that Forrest – not Fortescue – has been named in the lawsuit, even though he remains the iron ore giant's largest shareholder, having founded the company all those years ago.

More importantly, none of these external factors are likely to have any material impact on Fortescue's business fundamentals.

It will continue mining and selling iron ore tomorrow, just as it always has done.

Fortescue has also firmly rejected ExxonMobil's claims and will defend them in the proceedings.

Moreover, Fortescue shares also continue to be influenced by fluctuations in iron ore prices, which remain a critical revenue driver. Any negative sentiment arising from the lawsuit could amplify these pressures.

Foolish takeout

Fortescue shares continue to be at the mercy of iron ore pricing, which is depressed compared to 2024 levels. We also can't forget the potential impacts of anticipated US trade tariffs.

Today's headlines concern the company's founder and largest shareholder but aren't expected to change anything fundamental for the company.

In the last 12 months, Fortescue shares trailed the benchmark index by more than 48%.

The post Fortescue shares in focus as Twiggy named in ExxonMobil lawsuit appeared first on The Motley Fool Australia.

Will the market be able to bounce back from this on Tuesday? Here are five things to watch:

ASX 200 expected to rebound

The Australian share market is expected to rebound strongly on Tuesday following a reasonably positive start to the week on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 56 points or 0.8% higher. In late trade in the United States, the Dow Jones is up 0.25%, the S&P 500 is up 0.1%, and the NASDAQ is flat.

CBA Q1 update

All eyes will be on Commonwealth Bank of Australia (ASX: CBA) shares on Tuesday. That's because Australia's largest bank will be wrapping up reporting season in the banking sector with the release of its first quarter update for FY 2024.

Oil prices rise

ASX 200 energy shares including Beach Energy Ltd (ASX: BPT) and Karoon Energy Ltd (ASX: KAR) could have a good session after oil prices rose overnight. According to Bloomberg, the WTI crude oil price is up 1.3% to US$78.21 a barrel and the Brent crude oil price is up 1.3% to US$82.49 a barrel. This follows the release of a report from OPEC that counters market concern over waning demand.

Gold price rises

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Regis Resources Limited (ASX: RRL) could have a decent session after the gold price rose overnight. According to CNBC, the spot gold price is up 0.65% to US$1,950.5 an ounce. The gold price rose ahead of the release of US inflation data this week.

ASX 200 lithium miners on watch

ASX 200 lithium shares like Pilbara Minerals Ltd (ASX: PLS) will be on watch today after Exxon Mobil Corp (NYSE: XOM) announced its entry into the lithium market. According to CNBC, the US oil giant is starting a lithium drilling operation in Arkansas after purchasing 120,000 acres of land at a geological site called the Smackover formation. Exxon wants to supply enough lithium to support the manufacture of 1 million electric vehicles annually by 2030.

The post 5 things to watch on the ASX 200 on Tuesday appeared first on The Motley Fool Australia.

Such a long and steady track record shows that a company is financially stable and strong enough to fork out such a large volume of cash consistently.

Over on the US markets, there are many dividend aristocrats. Some you might have heard of include Caterpillar Inc (NYSE: CAT), Exxon Mobil Corp (NYSE: XOM), and McDonald's Corp (NYSE: MCD).

What's more, is that the US markets also boast quite a few dividend kings. These fabled royals of the share market have a 50-year streak of annually raising their dividends. This list is a lot smaller but includes Coca-Cola Co (NYSE: KO), Colgate-Palmolive Company (NYSE: CL), and Altria Group Inc (NYSE: MO).

Does the ASX offer any dividend aristocrats?

Unfortunately, here on the ASX, we have no dividend aristocrats by the US definition. Let alone dividend kings.

But we do have a couple of ASX dividend heavyweights that come close. And they are two shares that I think any investor could comfortably buy and hold for the long term.

The first is Brickworks Limited (ASX: BKW). Brickworks is a building and construction materials company. But it also has a few other earning streams, including from its lucrative property business.

Brickworks has a strong dividend track record. It hasn't raised its dividend for 25 consecutive years, so we can't call it an official dividend aristocrat.

But what it does have is a 45-year history of not cutting its dividends. In other words, Brickworks has either maintained or increased its annual dividends every year since 1976. Definity heavyweight material.

Soul Patts: 3 years to go

The second is Washington H. Soul Pattinson and Co Ltd (ASX: SOL).

Soul Patts is the closest thing to a dividend aristocrat the ASX has. No, Soul Patts hasn't quite got to 25 years of annual dividend raises. But it has upped its annual dividend every year since 2000. That means it's only three years away from becoming the ASX's first dividend aristocrat.

Soul Patts is a rather interesting company. It functions more as a listed investment company (LIC) than a traditional ASX business, owning large chunks of other ASX shares in a massive investment portfolio.

This it runs for the benefit of its shareholders. Soul Patts' largest holdings include TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), and Brickworks itself.

But Soul Patts also owns a large and diversified portfolio of ASX 200 shares, thanks to the acquisition of ASX LIC Milton Corporation last year. These include your typical ASX holdings like BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA).

Both of these would-be ASX dividend aristocrats have a long history of delivering meaningful returns to their shareholders. And both boast unrivalled dividend records on the ASX, if not yet long enough to qualify for the 'dividend aristocrat' tag.

As such, Soul Pattss and Brickworks are two ASX dividend heavyweights that I would happily buy and hold until retirement and beyond.

The post 2 ASX 200 dividend heavyweights to buy and hold until you retire appeared first on The Motley Fool Australia.

So has this popular ASX ETF really lost almost 95% of its value this week?

The iShares S&P 500 ETF is one of the most widely-held ETFs on the ASX. It's actually the ASX's most popular internationally-based fund. This ETF tracks the S&P 500 Index (SP: .INX), which is the most widely tracked index in the world.

It represents the 500 largest companies on the US markets by market capitalisation. That includes everything from Apple, Microsoft, and Amazon to Exxon Mobil, Coca-Cola, and McDonald's.

So no, this ETF hasn't collapsed by 95% this week. If the US S&P 500 Index was down 95% in one week, we'd certainly all know about it.

Rather, this ETF has just undergone a stock split.

A stock split for the S&P 500 ETF?

A stock split occurs when a company or ETF decides to increase its share (or, in this case, unit) count. It issues new shares (or units) to existing investors, at the same time diluting the value of the existing shares out there.

This has the effect of lowering the share (or unit) price of the company or ETF, but makes up for this by giving away new shares (or units).

This can be done for a number of reasons. But most do so to boost liquidity and to make it easier for investors to buy and sell shares or units.

At the start of this week, one single unit of the iShares S&P 500 ETF would set an investor back almost $600. That makes it a rather unwieldy investment to have to deal with.

This ETF's provider must have thought so too, because back on 23 November, BlackRock announced that the iShares S&P 500 ETF would be undergoing a 15-to-1 stock split.

That means that for every one unit of this ETF, investors now own 15. Concurrently, the unit price of this ETF has just been reduced by a factor of 15.

So if an ASX investor used to own 10 iShares S&P 500 units, worth $5,860, today, they own 150 units, each worth $39.07. Same value, different path to getting there.

So no investor has been left better, or worse off, from this split. It's just a cosmetic change for all intents and purposes.

Is it IVV or IVVDB?

But what's with the new ticker code? Yes, the iShares S&P 500 ETF used to trade under the code 'IVV'. But today, the ETF has seemingly switched to 'IVVDB'. Well, this is a temporary situation.

As we covered last week, part of the stock split process involves the ETF trading under a 'deferred settlement' basis. So today, the 'IVVDB' units represent the deferred settlement units.

This will only be in place until 13 December. That's when the deferred settlement period will have concluded and the ETF reverts to its old 'IVV' code.

The IVVDB units will seamlessly be converted into IVV units when this happens. So if you're desperate to buy the newly-split ETF today, don't let the new code hold you back.

The post Is the iShares S&P 500 ETF (IVV) really down 95% today? appeared first on The Motley Fool Australia.

As 2022 starts to close, it's only natural for investors to start peeking toward 2023. So far in 2022, the indexes have fared pretty miserably, with the Nasdaq-100 down 29% and the S&P 500 down 17%. Which one will have a better 2023?

Let's look at these indexes and their makeups and find out which is more likely to have a better 2023 ahead.

The indexes are highly concentrated on the top

At the top, the indexes have a lot of overlap.

Data source: Slickcharts. Data as of Nov. 19. *Note: Both Alphabet class shares combined.

Data source: Slickcharts. Data as of Nov. 19. *Note: Both Alphabet class shares combined.

As you can see, Apple, Microsoft, Amazon, and Alphabet make up a considerable chunk of these indexes. In the S&P 500, they account for 19.83%. It's basically double for the Nasdaq-100, with that group making up 39.16% of the index. It's pretty straightforward: How these companies do will significantly steer how the overall index does.

While these three are tech-focused, they compete in different markets. Both Apple and Amazon are a good measure of the pulse of the consumer, as their sales are highly affected by consumer sentiment. If inflation cools, and consumers don't need to worry about rising grocery prices or housing costs, they may treat themselves to the latest device.

Alphabet and Microsoft are business-focused, but for different reasons. Alphabet's primary revenue stream is advertising, and many clients have pulled back their spending levels in 2022 due to the uncertain business environment. If the outlook improves, expect this revenue to return. Microsoft's cloud business and Office product suite indicate how willing businesses are to spend on their infrastructure, but Microsoft's consumer product division also indicates how individuals are doing. 

If the consumer gets stronger and business outlook improves, these four will boom. If that's the case, then the Nasdaq-100 will likely have a better year because it is concentrated in companies that will benefit the most. But if 2023 brings an economic recession, the S&P 500's diversity will help it to outperform the Nasdaq-100.

The companies outside the top five are very different

For the S&P 500, when you move out of the top five, the companies become much more diverse.

Data source: Slickcharts. Data as of Nov. 19.

Now, there are industrials, healthcare, and energy sectors represented, giving the index some much-needed balance. Looking at the top 20 reveals even more diversity, with financials, energy, and healthcare rounding the index out.

This is far from the case for the Nasdaq-100.

Data source: Slickcharts. Data as of November 19. Note: Both Alphabet class shares combined.

Besides Pepsi and Costco, these companies are more in the tech sector. But, unlike the S&P 500, it doesn't get much better outside the top 10, with most of the top 20 consisting of chipmakers, communication companies, and software businesses. Now, this probably isn't a surprise because the media often refers to this index as the "tech-heavy Nasdaq."

Still, tech businesses don't do well if the economy is struggling.

Does that mean you should write the Nasdaq-100 off? Absolutely not. Tech stocks tend to do very well in the recovery phases of a recession. Plus, the stock market is forward-looking, and stocks usually tend to do better during a recession than leading up to one.

That last tidbit of information should keep investors in the market, especially now with a recession, or at least an economic slowdown, imminent. However, if you're trying to decide which index to buy, you need to utilize the 2023 outlook. If you think 2023 will be a repeat of 2022, then the S&P 500 is the better choice. On the other hand, if you believe the economy will begin to recover and the Federal Reserve eases its interest rate hikes, then the Nasdaq-100 is the place to be.

One last point: There's nothing wrong with owning both indexes if you don't know what 2023 will bring. Personally, I think this is an intelligent strategy, as it gives investors the upside of recovery and the safety of a balanced investment.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Will the Nasdaq or S&P 500 have a better 2023? appeared first on The Motley Fool Australia.

Countless factors affect stock prices on a daily basis. Some are very broad like global events and macroeconomic trends. Others are more narrow: company-specific news or changes to analyst price targets. But all of those things affect investor sentiment to some degree, making it impossible to predict which direction a stock (or even the broad market) will move in the short term.

You may hear stories about day traders who made a fortune overnight. Well, some lucky people have also become millionaires by playing the lottery, but that doesn't mean you should invest your money in lottery tickets. Several studies have shown the vast majority of day traders actually lose money, and the ones who manage to turn a profit often make less than minimum wage.

Put simply, the best way to make money in the stock market is a long-term investment strategy. For instance, the S&P 500 has produced a positive return 100% of the time over any 20-year window between 1919 and 2021, according to Crestmont Research. That means patient investors who held an S&P 500 index fund for at least two consecutive decades (at any point over the last century) always made money.

Here is one way to benefit from that information.

A simple way to make money in the stock market

The Vanguard S&P 500 ETF (NYSEMKT: IVOO) is a passively managed fund that tracks the performance of the S&P 500, which includes 500 of the largest U.S. companies. That may be less exciting than buying individual stocks, but there are several advantages to this strategy investors should consider.

First, the Vanguard S&P 500 ETF offers instant diversification across all 11 market sectors, and investors get exposure to some of the most valuable brands in the world. For instance, the top 20 holdings include industry-leading names like Apple, Inc. (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc.(NASDAQ: AMZN), The Home Depot, Inc.(NYSE: HD), Mastercard Incorporated(NYSE:MA), Visa Inc. (NYSE: V), UnitedHealth Group (NYSE: UNH), Johnson & Johnson (NYSE: JNJ), Tesla Corp Ltd (NASDAQ: TSLA), Alphabet Inc. (NASDAQ: GOOG) (NASDAQ: GOOGL), and ExxonMobil Corporation (NYSE: XOM).

Second, the Vanguard S&P 500 ETF is cheap and time-efficient. It bears an expense ratio of 0.03%, meaning investors would pay only $1.50 per year in fees on a $5,000 portfolio. Additionally, it requires very little work, because there is no need to research specific companies or stay up to date on financial results. Investors can simply buy the ETF and forget about it.

In short, while it may be boring, buying an S&P 500 index fund is a simple, inexpensive, and time-tested path to making money in the stock market. That's why Warren Buffett has often advocated for this investment strategy.

Third, the Vanguard S&P 500 has generated a total return of 206% over the last decade, which is equivalent to an annualized return of 11.8%. At that pace, $100 invested on a weekly basis would grow into a $1 million portfolio in 28 years, and it would grow into a $2 million portfolio in 34 years.

How I manage my portfolio

An S&P 500 index fund does not have to be your only investment. Personally, I keep a certain percentage of my portfolio in the Vanguard S&P 500 ETF, but I also own dozens of individual growth stocks. I think of the S&P 500 index fund as a sort of safety net, a reliable money maker in the long run.

Of course, nothing is truly guaranteed when it comes to the stock market, but the S&P 500 has undeniably produced a positive return over every rolling 20-year period since 1919. And that knowledge makes me feel comfortable taking a little more risk with my other investments.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post This stock market investment strategy made money 100% of the time over the last century appeared first on The Motley Fool Australia.

The stock market suffered a setback on Tuesday, giving back gains from Monday's session amid renewed fears about what the Federal Reserve might do when it concludes its two-day monetary policy meeting on Wednesday. Losses for the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) amounted to roughly 1%, with small-cap stocks taking relatively larger hits than their large-cap counterparts.

Data source: Yahoo! Finance.

As the stock market becomes more volatile, investors are increasingly appreciating companies that reward them with predictable and growing streams of dividend income. Today, Microsoft (NASDAQ: MSFT) announced that it would boost its quarterly payout to shareholders. The tech giant pays a relatively modest yield, but some other dividend-stock stalwarts are also in line to pay more to their investors in the near future. Read on to learn more about Microsoft as well as three other companies that could give similar rewards to shareholders soon.

A higher payout for Microsoft

Microsoft stock didn't do all that well on Tuesday, losing almost 1% in the regular trading session. However, long-term investors will get a little bit more from  the software giant in the form of higher dividend checks.

Microsoft's board of directors declared a quarterly dividend of $0.68 per share. Shareholders of record as of Nov. 17 will receive the higher payout, which will show up in investors' accounts on Dec. 8. The payout is $0.06 higher than the previous $0.62 per-share quarterly dividend.

With a dividend yield of only about 1%, most investors don't think much about Microsoft as a dividend stock. Yet the company has developed a solid track record of boosting dividend payouts over time, with the latest move making 2022 the 20th straight year in which Microsoft has paid more in annual dividends than in the previous year.

These companies could be next

Many companies have even longer track records than Microsoft in paying higher dividends. For instance, the following three companies typically announce their dividend increases around this time of year:

• Emerson Electric (NYSE: EMR) has an impressive 65-year track record of paying higher dividends to its shareholders. The company's most recent increase came last November when it announced a 2% boost to $0.515 per share on a quarterly basis.
• Fast-food giant McDonald's (NYSE: MCD) made a larger payout boost late last year, increasing quarterly dividends by $0.09 to $1.38 per share. The Golden Arches chain has a 47-year streak of paying higher dividends for long-term shareholders.
• ExxonMobil (NYSE: XOM) has a 40-year dividend-increase streak on the line as it enters the final months of the year. Last year's most recent payout boost added just a single penny to the quarterly payout, with shareholders receiving $0.88 per share each quarter.

There's no guarantee that these companies will follow through with dividend increases. Every year, there are often at least a few long-paying dividend stocks that have to make payout cuts or even suspend their payouts temporarily.

However, all three of these blue chip stocks have strong businesses underlying them, and they've had the ability to weather difficult economic times in the past and still give their shareholders higher payouts over time. At a time when many investors are feeling increasingly uncomfortable with how much the prices of their stocks have fallen, the extra confidence of knowing that they can receive a quarterly check from these companies is especially valuable.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Microsoft just hiked its dividend. Who's next? appeared first on The Motley Fool Australia.

There's no question the $4 trillion energy sector has been home to the best-performing stocks on the market recently.

Over the past year, energy stocks have gained 72% on average while the next closest sector, utilities, rose less than 15%. In comparison, the broad market S&P 500 Index (SP: .INX) index lost 1%, and that started long before Russia invaded Ukraine.

It hasn't been much different in 2022 either, with the oil and gas stocks, in particular, leading the way. Energy is again on top with a 58% gain as utilities again ranked second with a less than 5% increase in value.

Yet over longer periods, the high cost of exploration and resource exploitation has made the energy sector a lagging sector for investors.

Technology stocks were the market darlings only until recently and over the past decade energy stocks ranked dead last with simple double-digit increases when virtually every other sector was sporting triple-digit gains. 

Oil and gas stocks are the stars these days, but is now the time to buy them?

Beating up on big oil

President Joe Biden recently said he hoped Americans could come out of the current energy crisis less dependent on fossil fuels. Alternative energy sources are already a rising component of the world's energy consumption, about 30% of the total, and that number is continuously growing.

Where the energy sector accounted for 29% of the stocks weighted in the S&P 500 in 1980, today they represent just 3.7%. Back then, seven of the top 10 stocks in the popular index were oil and gas stocks, led by ExxonMobil (NYSE: XOM); today there are none. 

And in a sign of how the world is further changing, Exxon was booted out of the Dow Jones Industrial Average in 2020 -- a spot it has held for nearly 100 years -- leaving only Chevron (NYSE: CVX) to represent the industry. Oil and gas stock investing isn't what it used to be.

Oil, oil everywhere

Yet that doesn't mean you shouldn't invest in the energy sector. It is simply too ingrained in the global economy to disappear.

For example, the U.S. Energy Information Association forecasts global "conventional" light-duty vehicles will nearly double from 1.31 billion in 2020 to 2.21 billion at their peak in 2038, but that will still far outstrip electric vehicle usage.

General Motors (NYSE: GM) has said it wants to produce only electric vehicles (EVs) by 2035 while Ford Motor Company (NYSE: F) is shooting for 40% of its fleet.

Tesla (NASDAQ: TSLA), in contrast, says it wants to sell 20 million EVs by 2027. However, the EIA predicts EV usage will grow from just 0.7% of the global LDV fleet to 31% in 2050, or just 672 million vehicles. Not an insignificant number, but still trailing gas-powered vehicles.

Petroleum products account for about 90% of all energy usage in the U.S. transportation sector, with gasoline accounting for 56% of the total.

Distillates, primarily diesel fuels, accounts for another 24%, and jet fuel, 9%. And jet fuel usage is growing rapidly with the EIA expecting consumption to increase at a faster rate than any other liquid transportation fuel through 2050.

And fossil fuels are in almost every product consumers use today, with petroleum appearing in everything from cosmetics and personal care products, to everyday items such as smartphones, computers, TVs, shoes, sporting goods, flooring, furniture, and medical supplies.

Grand View Research estimates the global petrochemicals market size was valued at $556.1 billion in 2021 will grow at a 6.2% compound annual rate through 2030, driven primarily by construction, pharmaceuticals, and automotive needs, as well as our industrial economy.

And though petroleum itself is not as important of a component for plastics manufacturing, natural gas and natural gas processing is. 

Still a gusher of an opportunity

The chances that alternative energy replaces fossil fuels for the foreseeable future are incredibly low. That's why I think the energy sector generally, and oil stocks in particular, are great buys, even today at their elevated levels.

Fossil fuels will be around for a long, long time meaning investors are to look very closely at some of the best energy stocks in the space as a long-term growth investment.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Is now the time to buy oil stocks? appeared first on The Motley Fool Australia.

GE held on to the title with an iron fist for nearly two years:

GE MARKET CAP DATA BY YCHARTS.

Exxon takes over

By the summer of 2002, Microsoft had recuperated while oil producer ExxonMobil rose through the ranks. The top spot shifted between these three companies over the next four years, and then Exxon controlled the crown between 2006 and 2011:

GE MARKET CAP DATA BY YCHARTS.

At this point, Apple had turned its iPhone and iPad product lines into a world-class cash machine. Apart from a brief skirmish with Exxon in 2013, Cupertino monopolized the market cap throne for seven years:

GE MARKET CAP DATA BY YCHARTS.

What's new?

And now we're in the modern era. Apple is still the monarch of the market cap, but the title always seems to be within reach of Microsoft and e-commerce veteran Amazon. Online services expert and Google parent Alphabet has also joined the fray every now and then, but never quite managed to reach the top spot:

GE MARKET CAP DATA BY YCHARTS.

What have we learned from these charts?

In two decades and change, we've seen the business world shift away from oil producers and industrial-engineering companies while software, online services, and consumer electronics soared higher and higher. Amazon and Apple were mere minnows at the start of this adventure, with respective market caps of $27 billion and $17 billion at the turn of the millennium.

Over the same period, the early leaders have fallen out of sight. These days, General Electric and ExxonMobil are so far behind that they don't even belong in this conversation anymore. (The bigger they are, the harder they fall.)

Come back in another couple of decades, and the list of the market's largest market caps will probably look very different once more. Not even Apple and Microsoft are immune to market shifts and new challengers in the long run. The biggest winners in this millennium weren't the largest blue-chip companies at the start of the race, but the smaller and hungrier upstarts that were still piecing together their long-term business plans:

AAPL TOTAL RETURN PRICE DATA BY YCHARTS.

The post The world's most valuable companies from 2000 to 2022 appeared first on The Motley Fool Australia.

Long-awaited governmental approval to develop Oil Search's 38.5%-owned P'nyang gas field could reportedly be just days away.

The green light could see the planned all-scrip merger of Santos and Oil Search skewed further in Santos' favour.

At the time of writing, the Santos share price is $6.39, the same as its previous close.

For context, the S&P/ASX 200 Index (ASX: XJO) is in the green, boasting a 0.68% gain.

Let's take a closer look at the news that could reportedly increase the value of Oil Search.

Could this boost the Santos share price?

Santos is set to walk away with a bigger share of the merged entity than it's brought to the table. An announcement, reportedly expected to be released shortly, could further tip the balance.

The Papua New Guinean government has been in talks with the P'nyang gas field's operator, Exxon Mobil Corp (NYSE: XOM), for months. According to reporting by The Australian, the pair are getting ready to announce the project has been given the green light.

The approval could see development works begin at the gas fields.

Though, Papua New Guinea Minister for Petroleum, the Hon Kerenga Kua, previously said phasing construction over an 8-year period would benefit the country and its economy.

It could also boost the value of Oil Search's stake in the project, increasing the company's value.

That's worth noting as an independent expert's report found Oil Search's value wasn't reflected in the merger terms. They said:

Oil Search shareholders are contributing around 43-44% of the aggregate estimated underlying value of the merged group compared to the 38.5% of the merged group that they will receive.

They said, even after acknowledging cost savings from the merger, it will lower the value attributed to Oil Search shareholders. However, the expert concluded the merger is in the best interests of Oil Search shareholders.

Also noteworthy, Santos also owns a small share of the P'nyang gas fields. The entity resulting in the companies' fusion will own a 42.5% stake.

The companies have already indicated they plan to sell the stake down to around 30% following the merger. Doing so will ensure the merged entity has a smaller share than Exxon Mobil.

Oil Search shareholders are expected to vote on its proposed merger with Santos in early December. To get the scheme across the line, 75% must vote in favour.

The post Own Santos (ASX:STO) shares? Here's why the company could be in for some good news this week appeared first on The Motley Fool Australia.

At close of trade today, shares in the mining giant were selling for $47.44 – down 0.25%. By comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.68% lower.

Let's take a closer look at today's news and how it might be affecting the BHP share price.

BHP's joint venture

BHP revealed its 50/50 Gippsland Basin Joint Venture's West Barracouta natural gas field with Exxon Mobil Corporation (NYSE: XOM)'s Australian affiliate, Esso Australia, is now up and running.

The field, located in the Bass Strait off the coast of Victoria, is expected to provide domestic gas supply for Australia's east coast. BHP's stake in the venture is worth approximately $400 million. The project hasn't appeared to have a positive impact on the BHP share price.

Country Manager of BHP Petroleum Australia, Graham Salmond, said:

The Gippsland Basin Joint Venture has played a central role in reliably meeting the energy needs of Australian homes and businesses for 50 years.

As the largest domestic gas project in Australia in recent years, West Barracouta has unlocked a new, high quality gas resource that will help maintain Bass Strait production and support our diverse domestic customer base.

We aim to continue developing opportunities to maximise the value of Bass Strait for the joint venture and our shareholders.

Natural gas commodity price

Presently, natural gas is trading on the commodities market for US $2.75 per 10 billion British thermal units. While up 49.5% higher than this time last year, the price of natural gas is down 16.1% since the middle of February this year.

The website Trading Economics is forecasting the price of natural gas to fall to US $2.16 in 52 weeks' time.

The BHP share price, however, is still tipped to increase because of the surge in demand for copper.

BHP share price snapshot

Over the past 12 months, the BHP share price has increased by 54%. In fact, since the beginning of this year, the company's value has increased by 10.1%.

BHP has a market capitalisation of $224.3 billion.

The post BHP (ASX:BHP) share price lower despite natural gas update appeared first on The Motley Fool Australia.

Now the ASX 200 is seemingly pushing to greater heights this week. So I'm sure many an investor is wondering 'where to next?' for ASX shares, given we're barrelling towards a new year.

Where are fundies investing for 2021?

Well, reporting in the Australian Financial Review (AFR) today sheds some light on this question. The AFR is covering the Bank of America's monthly survey of more than 200 global fund managers (with a collective $784 billion in assets under management) for their views on how to position a share portfolio going forward. And the view is reportedly almost unanimous: "It's time to go long or go home".

The AFR reports that the fundies aren't too concerned over the recent 'second/third waves' of coronavirus cases around the world. Although they do note it's a risk. Instead, managers have "pulled forward their expectations for a credible vaccine to be announced from next February to next January. And are piling into trades that will benefit from the reopening of economies". Bank of America says the "US election outcome and the announcement of promising results from vaccine trials" are behind the "switch in the psyche of investors".

And that is resulting in cash positions being whittled to "15-year lows". Where is this cash going? According to the report, there are 3 areas which are overwhelmingly popular amongst the fund managers: emerging markets, oil, and the S&P 500 Index (INDEXSP: .INX).

A triumvirate of opportunity?

Emerging markets refer to the economies (and stock exchanges) of countries outside the 'advanced economies' of the world. Specifically such as the United States, United Kingdom, Europe, Japan, Canada and Australia. As an example, a typical exchange-traded fund (ETF) covering emerging markets is the iShares MSCI Emerging Markets ETF (ASX: IEM). This ETF is weighted 40.56% to China, 12.67% to Taiwan, 12.52% to South Korea, 8% to India and 4.88% to Brazil.

Oil is an interesting choice as well. Oil prices and companies have been decimated in 2020 as a result of the pandemic. Many are sitting at multi-year share price lows. Take Woodside Petroleum Ltd (ASX: WPL). It's currently trading at $21.77 after falling as low as $14.93 earlier in the year. Before 2020, you'd have to go back to 2005 to find similar pricing. It's a similar story with global oil giants like Exxon Mobil Corporation (NYSE: XOM).

Finally, the S&P 500 is the flagship index for US shares. Thus, a bet on the S&P 500 could be construed as a bet on the US shares, especially the larger companies like Amazon.com Inc (NASDAQ: AMZN), Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL) and Apple Inc (NASDAQ: AAPL).

The post Global fund managers are bullish on these 3 things appeared first on The Motley Fool Australia.

The northern winter hasn't really got rolling and already the coronavirus is spreading across much of the north at a truly pandemic rate.

While dreadful, a second mass outbreak during the cooler months shouldn't come as a surprise. After all, this is when people spend more time together in close proximity indoors. And even outdoors, the virus lingers longer on surfaces at winter temperatures.

I've been cautioning my family in the United States and in the Netherlands to brace for this second winter wave for months. Not that there's a whole lot they can do. Other than ensure an ample supply of hand sanitiser, facemasks and, well, toilet paper.

Although this second wave isn't entirely unexpected, the rate at which it's spreading has caught Europe's leaders off guard.

In a televised speech, French President, Emmanuel Macron, stated:

The virus is circulating at a speed that not even the most pessimistic forecasts had anticipated. Like all our neighbours, we are submerged by the sudden acceleration of the virus. We are all in the same position: overrun by a second wave which we know will be harder, more deadly than the first.

In an effort to slow the spread, France and Germany have reintroduced strict lockdown conditions. France's measures are almost as extreme as the stage 4 lockdowns Victorians endured, except that French schools will remain open.

Understandably, the daily news of mounting infection numbers – and uplifting speeches like Macron's – have put already jittery share markets even more on edge.

And the latest news on the renewed lockdowns in Germany and France – Europe's two biggest economies – prodded many investors to hit the sell button.

A sea of red

All the major European and American indexes sold off yesterday (overnight Aussie time).

In the US, the tech-heavy NASDAQ-100 (NASDAQ: NDX) led the way down, losing 3.9%.

In Europe, that undesired honour went to Germany's DAX PERFORMANCE-INDEX (DB: DAX), which closed the day down 4.2%.

Not surprisingly then, the S&P/ASX 200 Index (ASX: XJO) is losing ground today too, down 1.4% in early afternoon trading. Geographically, we may be a remote, island nation with extremely low COVID numbers. But when it comes to most of the shares on the ASX, what happens in the rest of the world matters.

And nowhere is this more true than in the energy sector.

ASX 200 energy shares pummelled

Already suffering from a global supply glut, the onset of the pandemic absolutely smashed the price of crude oil.

Brent crude, the global benchmark, had been tracking steadily higher since early October 2019. That was largely due to the success of OPEC+ (which includes Russia) in cutting excess output fuelled by record US production.

As recently as 6 January, Brent was trading for US$68.91 (AU$97.75) per barrel. By 21 April, it was down to US$19.33 per barrel. Buoyed by global government stimulus, low interest rates, and optimism that the virus could be held in check, Brent was trading for US$43.16 only last Tuesday 20 October.

At time of writing it's down to US$39.28.

ASX 200 energy shares, already the target of activist investors, have seen their values pummelled.

Woodside Petroleum Limited (ASX: WPL) is Australia's largest independent dedicated oil and gas company. Down 1.3% in intraday trading, year to date the Woodside share price is down 49%.

Santos Ltd (ASX: STO), Australia's second largest oil and gas company, is down 4.0% at time of writing. Year to date, the Santos share price is down 41%.

And US listed energy giant, Exxon Mobil Corporation (NYSE: XOM) has fared even worse. The Exxon share price slipped 3.8% yesterday, putting its shares down 55% year to date.

And most analysts are pointing the finger of blame (or one finger, in either case) directly at COVID.

Andrew Lebow, a senior partner at Commodity Research Group, observed (as quoted by Bloomberg):

This is more of a reaction to concerns over the coronavirus and potential for further restrictions and lockdowns than the crude build. Seemingly things are getting worse by the day.

Oil in the streets

Contrarian investor, Baron Rothschild famously said, "The time to buy is when there's blood in the streets." 

In the case of the leading ASX 200 energy shares, and Exxon if you're comfortable with buying international shares, that time looks nigh. 

Oil, along with the Santos and Woodside share prices, could well slide further if the pandemic lockdowns in Europe persist or even spread.

But once the world does get past this virus, I expect the demand for oil will rebound to pre-pandemic levels. This could see the share prices of companies like Exxon, Santos and Woodside rebound just as strongly.

The post 2 ASX 200 shares poised to rocket when the world reopens appeared first on The Motley Fool Australia.