Greetings My Wise Family!
Today, my focus is Pioneer Natural Resources Stock. How did I pick it?
It is 10:00 in the morning and I am waiting for my investment club meeting to start. I am a member of the CNBC Investment Club (with Jim Cramer). The live meetings start every weekday at10:20am. So, I decided to spend the 20 minutes writing you a letter.
As I am sitting here this morning sipping my Earl Grey tea (So, delicious!), I am thinking about my stock. You may know by now that I like stocks a lot.
I have some money that I want to use to add to my stock portfolio today. The stock that I am considering is one in Jim Cramer’s charitable trust portfolio.
Let me start by telling you that I do not buy stock to follow the charitable trust. But, I happen to have already owned some of the same stocks as the Trust when I learned of the CNBC Investment Club. However, I have added a few stocks to my portfolio as after Jim mentioned them.
Today, I am considering a stock that is the Trust. Inflation has an eroding effect on income. Inflation erodes not only active income, but also passive income. I receive passive income in the form of dividends. The focus of some of my dividends is to combat the effect of inflation.
So, I look for quality stocks that pay a higher than average dividend. That is not the entire focus of my portfolio. But that is what I am looking for today.
Today’s Stock In Focus:
Pioneer Natural Resources Stock
Pioneer Natural Resources is an independent oil and gas producer. Their stock symbol is PXD. PXD is one of the largest Permian Basin oil producers.
The CEO of Pioneer Natural Resources is its founder, Scott Sheffield. He founded it in April 1997. Its headquarters is in Irving, Texas. Their main source of oil is the Texas Permian Basin. They own about 800,000 acres. One of the reasons that they are so profitable is that they acquired much of their acreage at only $500 per acre!
In August 2021, Sheffield appeared on Mad Money on CNBC on Jim Cramer’s show called Mad Money. During the interview, Sheffield said that Pioneer had a commitment to return cash to shareholders. According to what I learned from the Investment Club, Pioneer is in a position to generate a large amount of cash flow, and plans to distribute much of it to shareholders via dividends.
In May 2022, Sheffield appeared on the CNBC Investor Club explaining Pioneer Natural Resources’s new variable dividend. So, each of their dividend payouts would be a combination of a base dividend plus a variable amount of dividend. Sheffield said that Pioneer plans to distribute their free cash flow back to shareholders, giving them 80% ( of the free cash flow.) He calls it a free cash flow policy. Sheffield has the goal to make PXD the number one dividend payer in the S&P 500.
The Pioneer Natural Resources stock (PXD) pays dividends four times a year. They last paid on September 16 . The dividend was $8.57 per share. In June, PXD paid $7.38 per share.
But, I never buy a stock based solely on its dividend. (In fact, a high dividend yield can often signal that a company is in trouble.)
So, let’s look at what some of my resources says about Pioneer:
- PXD has a nice low P/E ratio: 7.72
- 2. Fidelity Investments rates it 8.8, which is a Buy.
- Because I am a value investor, I like to look at the Zacks value score. The Zacks value score is B.
- Zacks also happens to give PXD a growth score of A. I don’t consider myself a growth investor. But, of course, I like to hear that my stocks are forecasted to grow in value.
- Zacks ranks PXD in the top 22% in its industry (out of 251 included in the ranking.)
- The Robinhood Investment app rates PXD as 62.5% for a Buy.
- Morningstar gives PXD a positive write up.
- Analysts at KeyBanc have recently started coverage of PXD, with a buy rating, and a 12-month price target of $290 per share. (The closing price yesterday was $231.74)
- TD Ameritrade rates PXD as a 10 (the highest).
- The pay-out ratio is high. But, that is by design in this particular company.
Based on what I can determine, Pioneer seems like a solid company. The CNBC Investing Club (run by Jim Cramer and Jeff Marks) believes in owning energy stocks as a way to hedge against inflation.This confirmation makes Pioneers plan to be the highest yielder in the S & P 500 music to my ears.
Am I buying any PXD today?
Recently, I have cut back on buying stock, because I have decided to collect and hold onto some cash. But, when I have a chance to average down, I like to take advantage of it. So, yes. By the time you hear from me again, I will have bought more Pioneer Natural Resources shares.
I hope that your investment journey has started, and that it is going well.
I’d love to hear about any of your recent stock purchases. Or, if you haven’t purchased any stock recently, what stock might you be interested in purchasing? Let me know in the comments.
Until next time, Have a Beautiful Day,
Rich Mom
Wondering About Rich Mom?
P.S. If you stumbled upon this letter and you are wondering who Rich Mom is: I am a mother to a young adult. I have majors and degrees in business, economics, and education, and I am passionate about financial literacy and personal finance. I am worried about the future of young adults who are often being burdened by massive student loan debt, but at the same time have never been taught about financial literacy. So many people work, forever living just paycheck to paycheck, never understanding the pattern that would make their lives easier. My goal with my blog is to inspire those ages 30 and under to become more financially literate, become financially independent, and be able to live a healthy (mentally and physically), happy, generous life, in which you can help others do the same.
I want you to be:
Young, Building Health & Wealth
One of my favorite ways to invest is through the stock market.
If you are interested in starting to invest in the stock market, and maybe even buying some Pioneer Natural Resources stock, feel free to use my Robinhood link. I love the Robinhood app, and I use it every day.
Robinhood is giving away free stock when you sign up for an account.
If you use my Robinhood link, I may receive a small payment. But, it will not cost you any additional money.
I appreciate the payment that I may get, because it helps to cover the cost associated with producing this blog. Thank You!
Want to learn more? Here’s another Rich Mom, Poor Kid post:
Uh-Oh! Did You Forget Everything That You Learned in Your Financial Literacy Class?
Ten Secrets to Building Wealth
Stock in Focus: FedEx & the CNBC Investing Club
I am not an investment advisor. Always do your own due diligence and research before investing. Check with your own investment advisor.
Also remember that past performance is not a guarantee of future performance.