A Rare Breed: ExxonMobil’s Impressive Dividend Streak
The oil industry has experienced its fair share of turmoil over the decades, with crude prices fluctuating wildly and briefly dipping into negative territory during the pandemic. This volatility has made it challenging for many oil companies to maintain their dividends, let alone increase them. However, ExxonMobil has defied the odds, boasting an impressive dividend history that sets it apart from its peers.
A Dividend Aristocrat
ExxonMobil has increased its dividend every year for over four decades, a feat achieved by less than 4% of S&P 500 companies. This remarkable streak has earned the oil giant a spot among the elite group of Dividend Aristocrats. CEO Darren Woods highlighted the company’s dividend prowess during the third-quarter earnings conference call, emphasizing its commitment to delivering a sustainable, competitive, and growing dividend.
Resilient Results and a Fortress-Like Balance Sheet
ExxonMobil’s ability to deliver resilient results throughout the economic cycle is attributed to its integrated business model, which includes oil and gas production, midstream infrastructure operation, and downstream refining and chemicals assets. This diversified approach helps mitigate the volatility of oil and gas prices, maximizing the value of every hydrocarbon molecule produced. The company’s fortress-like balance sheet enables it to continue investing in growth initiatives and increasing its dividend, even during periods of lower oil prices.
A Generous Payout
ExxonMobil’s dividend yield currently stands at over 3%, significantly higher than the S&P 500’s yield of less than 1.5%. The company’s massive dividend payment is easily affordable, with a cash flow from operations of $42.8 billion through the first nine months of the year and $26.4 billion in free cash flow. Exxon returned $26.1 billion in cash to shareholders through dividends and share repurchases, while maintaining an elite balance sheet with a $27 billion cash balance and a low 5% net debt-to-capital ratio.
A Great Dividend Stock for the Long Term
ExxonMobil’s consistent dividend growth, impressive yield, and extremely conservative financial profile make it an attractive option for long-term investors. With its ability to weather future storms in the oil market, ExxonMobil is well-positioned to continue growing its business and dividend, providing a stable source of income for shareholders.
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