Warren Buffett doesn't mind sitting on the sidelines. That's what he's doing for the most part these days. In 2023, he was a net seller of stocks.

However, the legendary investor has added a few stocks to Berkshire Hathaway's portfolio in recent months. There's one that he seems to be especially excited about -- Occidental Petroleum (OXY -1.94%). Buffett is buying this dividend stock hand over fist. Should you?

Aggressive buying

Buffett first initiated a position in Occidental in the third quarter of 2019. He added more shares of the oil and gas producer in the following quarter. However, his often-cited favorite holding period of forever didn't apply in this case. In the second quarter of 2020, Buffett completely exited Berkshire's stake in Oxy.

It's not surprising why Buffett didn't want to hold onto Occidental back then. The COVID-19 pandemic and related lockdowns caused the global economy to spiral downward. Demand for oil and gas dwindled with few people traveling.

In the first quarter of 2022, though, Buffett again placed a big bet on Occidental and bought close to 130 million shares for Berkshire's portfolio. He kept on buying the stock throughout much of the rest of the year.

The aggressive buying continued in 2023. And Buffett is still at it this year. Earlier this month, Berkshire added another 4.3 million Oxy shares. The stock now ranks as the sixth-largest holding in the conglomerate's portfolio.

What Buffett likes about Occidental

Buffett isn't buying Occidental shares for the company's dividend. Occidental is certainly a dividend stock, but its dividend yield is a paltry 1.25%. So what does the legendary investor like about Occidental?

I'd put valuation high on the list. Occidental's shares trade at below 10.8 times forward earnings. The average forward earnings multiple for the S&P 500 is nearly 20.7x.

However, Buffett wouldn't buy any stock unless he thought it would deliver solid earnings growth. I suspect that he agrees with Occidental CEO Vicki Hollub that oil prices will rise in the not-too-distant future, pushing oil stock valuations higher. Hollub told CNBC recently that she expects a supply shortage of oil by late 2025.

Speaking of Hollub, Buffett told CNBC's Joe Kernen last year that the Occidental CEO is "extremely competent." He seemed to especially like Hollub's focus on carbon capture technology. Occidental is betting that it will be able to use direct air capture to remove carbon dioxide from the atmosphere.

Should you buy this dividend stock?

Income investors might turn their noses up at Occidental because of its low dividend yield. Keep in mind, though, that the company has a super-low dividend payout ratio of under 15%. Last year, the company increased its dividend by more than 38%. I wouldn't be surprised to see another hefty dividend hike soon.

Another thing to watch for is more buying by Berkshire Hathaway. In August 2022, Berkshire received regulatory approval to acquire up to 50% of Occidental. Its stake currently stands at 28.3%. If Buffett keeps buying (and I expect that he will), it could push the stock higher.

I agree with Buffett's positive view about Hollub. Like the legendary investor, I also like Occidental's carbon capture strategy. The company wins if the demand for oil remains high. But if its direct air capture approach works, Oxy can make money from carbon removal even if oil demand falls.

When Warren Buffett goes all-in on a stock, it usually pays off over the long run. I think that Occidental is a good pick to buy right now.