This Buffett-Backed Dividend Stock Stands Above the Rest

Core Insights - Occidental Petroleum stands out in Warren Buffett's portfolio due to its solid management, competitive profit margins, and reliable dividend yield of 2.1% [3][14] - Despite challenges in the oil industry, including falling oil prices, Occidental continues to attract investment from Berkshire Hathaway, which holds a 26.9% stake and has regulatory approval to increase its ownership to 50% [3][11] Company Overview - Occidental Petroleum is one of the largest gas and oil producers in the U.S., with operations in the Denver-Julesberg and Permian basins, as well as offshore in the Gulf of Mexico, North Africa, and the Middle East [5] - The company operates across upstream energy production, midstream pipelines, and downstream chemicals and refining, maintaining competitive profit margins compared to larger rivals like ExxonMobil and Chevron [6] Financial Performance - In the second quarter, Occidental reported a net income of $288 million, or $0.26 per share, down from $992 million and $1.03 per share a year ago [9] - The company produced 604 million barrels of oil in the quarter, an increase from 553 million a year ago, but the average price per barrel fell 9% to $63.76 [9] Investment Strategy - Buffett's interest in Occidental began in 2019 with a $10 billion investment in preferred stock to finance the acquisition of Anadarko Petroleum, despite the need to cut dividends at that time [10] - Berkshire Hathaway has been steadily acquiring shares of Occidental, with significant purchases made in 2022 and 2023, reflecting confidence in the company's management and long-term prospects [11][13] Market Context - The oil industry is facing challenges, with oil prices dropping from over $110 per barrel in 2022 to around $65 currently, with expectations of further declines [8] - Despite the current downturn, Occidental's long-term investment narrative remains strong, supported by its growing dividend and effective management [14]