Gina Sanchez: Buy Exxon Mobil, Avoid Macy's

Investors who want exposure to high-yielding stocks should consider Exxon Mobil Corporation XOM and avoid Macy's Inc M, according to a notable wealth manager.

The Expert

Chantico Global CEO Gina Sanchez. 

The Thesis

Exxon Mobil's stock offers investors a 3.8-percent dividend yield, which does fall short of Macy's 5.16-percent dividend yield. But between the two stocks, investors should be buyers of Exxon, Sanchez said during a recent CNBC "Trading Nation" segment.

Rather then focusing solely on a stock's current dividend yield, investors should be pay attention to the company's fundamentals —which dictate its ability to sustain a dividend payout over the long term, Sanchez said. In Exxon's case, the oil giant is supported by rising oil prices, which are trading at nearly $70 per barrel after dipping as low as $26.05 in early 2016.

Exxon's payout ratio — the ratio of profit that is allocated to shareholders — is 66.5 percent, which is superior to the S&P 500 index and its payout of 36.3 percent, she said.

Investors are often "tricked" into buying high-yielding stocks after the share price has come down. This could be the case for Macy's, which is stuck in a "bad place" in the retail sector, Sanchez said. Compared to Exxon, she said Macy's balance sheet "doesn't look nearly as good."

Price Action

Shares of Exxon were trading up 0.29 percent at the time of publication Monday, while Macy's was up 1.87 percent. 

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