I just read a recommendation in the EarlyToRise.com newsletter to buy Exxon Mobil stock since the company is just so darn profitable.

I disagree. I have been an Exxon Mobil (XOM) shareholder for many years, and I’m not impressed.

Exxon Mobil can report massive profits, but if they’re a penny short of analysts (note the first four letters of that word) expectations – down goes the stock.

Also, Exxon is a component of the Dow and the S&P. That means that it can succumb to program selling when the market is getting killed due to rising oil prices, even when others in the oil patch are having a good day.

Exxon closed yesterday (horrible day for the market) down, at $86.79. Last fall, when oil prices were lower, Exxon traded as high as $96. It hasn’t seen that price since. Dividend yield is a measly 1.8% at current prices. To some degree, high crude hurts Exxon’s refined products division – but since oil is probably headed even higher that’s just another reason not to own the stock.

Exxon just can’t get a break. Sure it’s up a lot since 2004. Of course, it was higher in 2001 than 2004, but let’s forget about ancient history.

Look where your money could have been better invested: Chevron (CVX), they actually explore for oil and had a major find; Suncor (SU) has done fantastic even as other Canadian shale type companies have languished of late; EOG (EOG) which I owned and sold WAY too early.

But one could look at individual stocks all day, how about some ETF’s? IShares Natural Gas (IGE) has done far better than Exxon in the last few years, just pays a lower dividend (0.6%); IShares DJ Energy (IYE), perhaps a better comparison to Exxon (it includes Exxon even) has also far outperformed Exxon in the past year and pays 0.87% dividend.

Had I dumped my Exxon, paid the tax, and bought IYE last year I would be up, instead of down, and even after paying the tax probably have more money than with the Exxon I now will have to sell before Obama takes office at lower prices than last year.

Just because a company makes a lot of money doesn’t mean the market will reward them. And just because the company doesn’t make money doesn’t mean the stock won’t go to the moon – remember the tech stocks of the late ’90s?

And just because a company makes a lot of money doesn’t mean they will crank out the dividends either – it just means the big shots will get huge bonuses.

I think there are a lot of better places to invest your money than Exxon Mobil.

If you want to make money on energy stocks, I recommend you subscribe (it’s cheap) to Casey Energy Speculator.

Note: Nothing in this blog is EVER to be construed as investment advice.