Wednesday, January 7, 2015

New investment oppertunity

One of my goals is to keep the portfolio as diversified as possible from the start of my investing career. In order to achieve that, I used to compare stats of companies in very different sectors, because I did not own shares of any of these sectors, so it did not matter which I bought.

This comparison however, does not make very much sense.
Stats like PE and growth percentages make more sense if you compare KO & PEP, rather than MCD, UVW & DE.
Current sector diversification
For this graph I used the sectors from David Fish's CCC list.
So I'm looking for an investment oppertunity in one of these sectors, as I do not currently own them.
  • Energy
  • Industrials
  • Information tech
  • Materials
  • Utilities
As the oil price is plumming, Energy seems a very good sector to start investing in. Let's compare a few companies in this sector.

Chevron Corporation (CVX)

CCC Category: Champion (>25 years dividend increase)
Yield: 3.82%
P/E: 10.33
5 year DGR: 9.62%

Heimerich & Payne Inc (HP)

CCC Category: Champion (>25 years dividend increase)
Yield: 4.08%
P/E: 10.45
5 year DGR: 67.35%

Exxon Mobile (XOM)

CCC Category: Champion (>25 years dividend increase)
Yield: 2.99%
P/E: 11.63
5 year DGR: 10.22%

British Petrolium Inc. (BP)

CCC Category: None, but they pay dividend since 1993.
Yield: 6.36%
P/E: 12.03
5 year DGR: unknown

As I am still constructing the foundation of the portfolio, I'd like to keep investing in Champion companies, so I won't be investing in BP for now.

Any thoughts on the others? I've noticed other bloggers picking up CVX recently, but these numbers favor HP, don't they?

Thanks for reading!


  1. The challenge with HP is that their dividend growth was really low before a couple of off the chart years. For me, going with the larger more diversified play of CVX makes more sense, and is why I've invested in them.

    Best of luck as you make your decision!

    1. Hi w2r,

      Thanks for your continued contribution to my blog. It's much appreciated!

      Best wishes, DfS

  2. Portfolio diversity is really a function of your own comfort level more than anything else. You may read or hear about many financial planners touting you need X% in this asset class and X% in that etc. but the reality is that most suggestions are based on future speculation and really has no more merit than any other portfolio diversification measure. The bottom line is if you can sleep well at night and are happy with your portfolio allocation then you are set.

    1. Hey DivHut,

      Thanks for your comment. You are absolutely right. Diversification is not the only reason I picked the Energy sector as my next investment oppertunity. The oil price situation is another big factor. In other words, these stocks are all relatively cheap at the moment. Which is always a big plus of course :)

      Thanks for stepping by!

      Best wishes, DfS

  3. CVX and HP are two completely different animals. Depends on what exposure you want in your portfolio. CVX is more of a complete energy giant operating in both in upstream and downstream - so its an integrated oil company. HP asaik is just drilling and exploration.
    I own CVX and its seriously attractive right now. I would add more if I had the cash, but theres still time until this whole oil massacre settles down. I already added to my CVX position in Oct, but will probably add again this year.


    1. Hi R2R,

      Thanks for pointing this out. As a foreigner these differences are sometimes difficult to find out. Both companies seem to be very depending on the crude oil price, as both companies are pretty close to their 52w low value. However, as you pointed out, the businesses are still working in a different field.

      It makes sense to invest in CVX, rather than HP, knowing these differences. "Complete energy activities" would seem to be more profitable in the long run than just drilling and exploration, as oil is running out rapidly.

      Best wishes, DfS

  4. I would definitely add energy stocks first... but that might just be me! CVX would be my my bet too!