Super Major Energy Portfolio Update: 2+ Year Returns from My Oil Well

Oil prices began to collapse just as I was becoming more serious about investing in stocks (and actually having the cash necessary to do so). That being the case, it was only natural for me to pick up shares in the giant, super major integrated energy companies, as their prices fell. Also, Phillips 66 and Union Pacific, became investing options for me as smaller players within the overall picture of energy production and transport. It’s been over two years and close to three in some cases since I started investing in these firms for the long run. How have they held up?

Some things to note:

• The Royal Dutch Shell gains don’t look as impressive as they should since I accidentally bought more shares a few months ago.  I had an automatic investment trigger turned on and a cash balance in my brokerage account, which was meant for something else. Oops! Oh well, this has made RDS the biggest holding, when it was roughly equal with Exxon beforehand and those shares have gained a little bit in value since then. Also, me being an idiot and only making one purchase when the shares were at $40 and not grabbing even more at $37 a share and over a 10% dividend yield…dumb. I had the cash on hand to make that happen.
• I have just recently started taking some dividends as cash after having reinvested all previous payouts. From now on: XOM, PSX, and BP are straight cash payments. RDS-A and RDS-B will be taken as cash in my brokerage accounts while the shares in my Roth IRA will be reinvested. All of my other non-energy investments (except PG) are being reinvested. Actually receiving cash makes investing more tangible for me. Especially since XOM sends their dividend by check and I have to go to the bank to make a deposit, just like at work before direct deposits were set up. I enjoy it, it’s like getting a nice little income bonus.
• Phillips 66 recently changed their direct investment plan to include fees (with a 5% reinvestment fee). This sucks, as they had one of the best plans on the market before. It was fee-free with a $25 minimum investment. PG did this over a year ago and I hope the XOM and UNP don’t follow suit. This was another reason I started to take more dividends as cash. These fees absolutely crush smaller investors ability to make bi-weekly or monthly automatic investments.
• On that note, I have re-started making bi-weekly investments into Union Pacific, since I never finished creating a full position in the company. XOM and perhaps BP are the only other of these companies that I am currently considering investing in. I would like to get my XOM yearly dividends up to the $100 range (on the march towards 100 shares, eventually) over the next year but we shall see how the price movement affects that plan.

Portfolio Holdings and Results 

Royal Dutch Shell: +21.8%

ExxonMobil: +8.67%

BP: +23.1%

Chevron: +13.47%

Phillips 66: +27.6%

Union Pacific: +24.1%

Total Percentage Increase of Share Values: +19.26%   (plus 0.74% of original investment taken as cash through non-reinvested dividends)

Not too bad.  My BP and Chevron holdings are very small and will probably always lag behind XOM and RDS. I will have to add more to each over time, I’m thinking that those two will both be held as half a ‘full position’, and sort of combine to count as another third of a super-major triumvirate. There is also the case to be made for adding Total SA into the mix sometime in the future. I’ve wanted to create a diversified holding of energy companies with varying weights that could protect my downside in the event of another BP oil spill scenario for any one of the companies.

The current yield for this portfolio is about 5.3% and I could definitely see that increasing as the years go by and the industry finishes stabilizing. XOM is of course the laggard of all of these positions, as it is currently trading close to its 52 week lows, but not too long ago it was in the 15-20% gain area. Not spectacular, though, this is just a snapshot into a long-term and hopefully multi-decade project. This portfolio already pays for my car’s gas consumption for the year and maybe down the line, an entirely new car just from dividends alone.