Occidental Petroleum: A Premier Lithium Stock to Buy in the Green Energy Era

The race toward decarbonization is reshaping global investment landscapes, and lithium stocks to buy are attracting unprecedented institutional capital. According to the International Renewable Energy Agency, battery lithium consumption is expected to surge tenfold within this decade, driven by the explosive growth in electric vehicles and renewable energy storage. For investors seeking lithium stocks positioned at the intersection of traditional energy expertise and emerging clean tech, Occidental Petroleum (OXY) presents a compelling case study. The Houston-based energy giant is transitioning into lithium extraction while maintaining its dividend-paying heritage—a rare combination that has caught the attention of Warren Buffett’s Berkshire Hathaway.

Occidental Petroleum: Bridging Legacy Energy and Lithium Opportunity

Occidental Petroleum Corporation, with a market capitalization of $53.7 billion, has spent over a century mastering hydrocarbon extraction and petrochemical production across the U.S., Middle East, and North Africa. The company’s shift toward lower-carbon energy, spearheaded through its Oxy Low Carbon Ventures subsidiary, has fundamentally altered its investment thesis. This strategic repositioning is not merely corporate greenwashing—it represents a genuine pivot that has resonated with sophisticated investors.

Berkshire Hathaway initiated its position in Occidental during the first quarter of 2022. More significantly, between June 2024, Berkshire accumulated approximately 2.6 million additional shares, bringing its total stake to roughly 250.6 million shares valued at $15.2 billion. This substantial investment underscores Buffett’s confidence in the company’s strategic direction and the viability of lithium stocks as long-term wealth builders.

Financial Performance and Dividend Appeal

For income-focused investors evaluating lithium stocks to buy, Occidental’s dividend profile offers attractive stability. The company pays a quarterly dividend of $0.22 per share, translating to an annualized yield of $0.88 or 1.46% forward. Notably, the payout ratio stands at a conservative 17.78%, suggesting considerable room for future dividend expansion without compromising balance sheet strength.

In valuation terms, Occidental trades at 15.46 times forward earnings—significantly below its five-year average of 31.83x. This discount presents opportunities for value-oriented investors seeking exposure to lithium sector plays.

Occidental’s first-quarter 2024 results demonstrated operational excellence. The company generated $6 billion in revenue while delivering adjusted earnings per share of $0.63, surpassing Wall Street projections. More impressively, the firm closed the quarter with $1.3 billion in unrestricted cash and generated $720 million in free cash flow. For the second quarter of 2024, management guided for production between 1.23 and 1.27 million barrels of oil equivalent per day—the highest quarterly output in over three years. This operational momentum, supported by expanded U.S. onshore activity and resumed Gulf of Mexico production, suggests the company is firing on multiple cylinders.

Lithium Extraction Innovation: Direct Lithium Extraction Technology

What truly distinguishes Occidental among lithium stocks to buy is its proprietary lithium extraction technology. In June 2024, Occidental and Berkshire Hathaway Energy’s subsidiary, BHE Renewables, formalized a joint venture to demonstrate TerraLithium’s Direct Lithium Extraction (DLE) technology. This partnership leverages BHE’s existing geothermal infrastructure in California’s Imperial Valley, where ten geothermal power plants process 50,000 gallons of lithium-rich brine per minute while generating 345 megawatts of clean electricity.

The DLE approach represents a paradigm shift compared to traditional lithium mining. Rather than requiring massive evaporation ponds that consume vast quantities of water and require months to extract lithium from salt deposits, DLE technology enables direct extraction of high-purity lithium compounds from geothermal brine. If the demonstration proves successful, BHE plans to construct and operate commercial lithium facilities throughout the Valley and beyond, while licensing the technology for broader application.

Richard Jackson, Occidental’s U.S. Onshore Resources and Carbon Management Operations President, emphasized the competitive advantage: “By leveraging Occidental’s expertise in brine management combined with BHE Renewables’ geothermal operational excellence, we are uniquely positioned to pioneer sustainable lithium production.” This technological moat differentiates Occidental from competitors purely focused on traditional extraction methods.

Analyst Consensus and Forward Guidance

The investment community has taken notice of Occidental’s transformation. Analysts tracking the stock project earnings per share to rise 5.1% to $3.89 in fiscal 2024, followed by a more substantial 28.5% increase to $5.00 in fiscal 2025. The consensus rating stands at “Moderate Buy,” with 21 analysts covering the stock: six recommend “Strong Buy,” fourteen suggest “Hold,” and one offers a “Strong Sell.”

The mean price target of $72 implies potential upside of 19.5%, while the Street-high target of $90 from Scotiabank (assigned in April 2024) suggests possible appreciation of 49.4%. These projections underscore why professional investors continue to evaluate lithium stocks like Occidental within broader clean energy portfolios.

The combination of Buffett’s continued accumulation, operational cash flow strength, conservative dividend policy with expansion potential, and cutting-edge lithium extraction technology positions Occidental Petroleum as a distinctive candidate for investors seeking exposure to both the lithium mega-trend and traditional energy dividend yield.