When it comes to dividends, most oil companies are tightwads. Exxon Mobil (XOM - Get Report), for example, made $7.8 billion in net income in the first quarter of 2005. That was up $2.4 billion from the first quarter of 2004.
And yet the company's stock yields just 1.9%. It pays out a miserly 27% of profits to shareholders as dividends.
And Exxon Mobil isn't by any means the stingiest of the lot. Although BP (BP - Get Report) yields 3.4% and Shell Transport and Trading (SC - Get Report) a very respectable 5.5%, many oil stocks pay less than 1% or no dividend at all. For instance, Apache (APA - Get Report) shows a yield of just 0.6%, Anadarko Petroleum (APC - Get Report) and Burlington Resources (BR) just 0.7% and Pogo Producing (PPP - Get Report) just 0.6%. St. Mary Land and Exploration (SM) pays nothing.
That should change in the next couple of years. Growth in oil-company dividends is on a long-term and very steep upward trend. And for investors who will retire five to 10 years from now, oil stocks are the best dividend bet in the market. If you know what to look for in an oil-stock dividend play, that is. By the end of this column, I'll have given you five oil stocks to check out as 10-year income plays.