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I Like Big Betas and I Cannot Lie

NEW YORK (TheStreet) -- Publicly traded companies with big betas move up and down more than the stock market as a whole. For long term investors, that phenomenon offers the opportunity to get in at a bargain price. Here are three reasons why big oil stocks with big betas and big dividends such as BP (BP - Get Report), Eni SpA (E) and Total SA (TOT) are so appealing to long term investors.

The future is bullish for the oil and natural gas sector.

At present, oil is the major fuel source for the world. The increasing need for energy will result in the demand for natural gas increasing nearly 50% by 2035, according to the International Energy Agency. More oil will be used, too. That outlook is obviously promising for oil and natural gas firms.

When share prices dip, dividend yields increase for big beta stocks.

BP, Eni and Total all have dividend yields more than twice the 2% average of a member of the Standard & Poor's 500 Index. If the share price goes down, the dividend yield rises by that much more. With BP having a dividend yield of 4.52%, Eni's being 4.97%, and Total at 5.08%, patient investors buying when the shares drop can lock in a high level of income.

The big beta is not necessarily a sign of a bad company, either.

Other articles on TheStreet have detailed how studies from Russell Investments determined that stocks with low betas perform better over time. But BP, Eni and Total are foreign oil companies from England, Italy and France respectively, in a very volatile sector at a time when North American firms are favored.

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