‘I have nothing against tech companies. What I am saying is that if you have a car manufacturer or an oil and gas manufacturer, you won’t get the supply over the Net’

Anil Ambani.

Oil companies have traditionally been a good choice for investors looking for an income from dividends. I believe they will continue to deliver.

You can’t send oil via fibre optic cables, and you can’t run a car virtually. For all of the speculation about renewable technologies, the green agenda and the move away from our reliance on oil, I see no prospect of that changing in the medium term.

I do see the prospect for oil prices to head higher and for good dividends for shareholders.

1.     Change Will Take Time

Don’t worry about where you nearest electrical car charge port is just yet. Major transformations in industry and technology can take time. It may be twenty years or more before replacement technologies for oil start to become embedded and commercially viable.

Remember that oil companies have lots of money. They can let others speculate on new energy technologies, and if one looks like it might succeed, well guess who will be likely to bid for it.

2.     Big Money Drives Change

 ‘The use of solar energy has not been opened up because the oil industry does not own the sun’.

                                  Ralph Nader

Oil and gas companies are investing only modest amounts into green technologies. It remains peripheral to their core activities. For the foreseeable future we’re still going to live in an oil dependent world.

3.     There Is Always 25 Years

What about oil running out? Whether it is 25 years or 50 years, that is a long time.

Oil is not going to end next year or the year after, but it is a finite resource and it’s going to get more expensive, unless of course someone changed the rules of supply and demand when I wasn’t looking.

4.     Oil Companies Paying Good Dividends

So, a few oil companies that are currently paying good dividends.

•  Exxon Mobil Corp. Worth over $200 billion and growing. Currently paying a dividend of around 2.9%.
•  Royal Dutch Shell ‘A’. Worth over £60 billion and currently paying a dividend of 6.5%.
•  Total. Worth over £65 billion and currently paying a dividend of 6.2%.

There are others. Chevron is currently paying a 3.9% dividend and Marathon Oil is currently paying 3.1%. BP didn’t make this list as it seems likely that dividends from BP will be suspended as a result of the Deepwater Horizon disaster.

Oil companies are far from a declining industry and are worthy of consideration for the income investor.

 ‘Formula for success: Rise early, work hard, strike oil’.

                                  Jean Paul Getty.

Jamie E Smith is the author of Making Money From Stocks And Shares

This content was provided by one of our users, Jamie