ExxonMobil Hits a New All-Time High. Is It Too Late to Buy the Stock?
Key Points
ExxonMobil is a leading oil and gas producer that benefits from rising oil prices.
Its shares have soared by close to 50% this year, as oil prices haven't been this high since 2022.
Crude oil, however, could still go higher if the war in Iran doesn't come to an end soon.
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Commodity prices are high, and so too are the valuations of many top oil and gas stocks. ExxonMobil (NYSE:XOM), which is a leading oil producer, has been a top company to invest in this year, with oil prices rising due to the war in Iran. The top oil and gas stock is now up close to 50% since the start of the year, recently hitting not only a new 52-week high but also a new all-time high.
This stock, which investors have typically loaded up on for its long-term stability and dividend growth, has surged tremendously in value this year. The concern for investors, however, may be twofold. One is that the yield has come down as a result of its higher price tag, and the second is that with a high valuation, future returns may be limited.
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Is it too late to buy the stock?
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Why ExxonMobil stock can still rise higher
If a stock has hit a new high, that's typically a positive sign that its business has been doing well and that investors see plenty of growth ahead. ExxonMobil benefits from rising oil prices, and with the war in Iran not ending and potentially intensifying, upward pressure on oil prices may persist for the foreseeable future.
The price of crude oil is around $100 per barrel today, and while that is significantly higher compared to where it was last year, when it was commonly around $60, it's also not quite at the highs it reached back in 2022, when rising inflation sent it north of $115.
Not only might it get back to those levels, but it may potentially rise higher, depending on how long the war drags on.
It's not too late to invest in ExxonMobil, especially for dividend investors
ExxonMobil stock hasn't run out of room to rise higher by any means. The business has become larger over the years, and it's in an excellent position to benefit from rising oil prices. Although its dividend yield has come down this year because of its rising share price, at 2.3%, the payout is still more than twice the S&P 500 average of just 1%. The company has also raised its dividend for decades, giving investors ample incentive to remain invested in the stock for the long haul.
The oil and gas stock hitting new heights may send alarm bells to investors that its value has been rising and that it's now more expensive to own, but with a solid business and a leadership position in the sector, it can still be an excellent investment to buy and hold.
Should you buy stock in ExxonMobil right now?
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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