Exxon Mobil Corporation (NYSE:XOM) will increase its dividend from last year's comparable payment on the 11th of December to $0.95. Even though the dividend went up, the yield is still quite low at only 3.7%.
See our latest analysis for Exxon Mobil
Exxon Mobil's Earnings Easily Cover The Distributions
If it is predictable over a long period, even low dividend yields can be attractive. However, prior to this announcement, Exxon Mobil's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.
EPS is set to fall by 10.3% over the next 12 months. Assuming the dividend continues along recent trends, we believe the payout ratio could be 41%, which we are pretty comfortable with and we think is feasible on an earnings basis.
Exxon Mobil Has A Solid Track Record
The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $2.28 in 2013, and the most recent fiscal year payment was $3.80. This implies that the company grew its distributions at a yearly rate of about 5.2% over that duration. The dividend has been growing very nicely for a number of years, and has given its shareholders some nice income in their portfolios.
The Dividend Looks Likely To Grow
Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Exxon Mobil has seen EPS rising for the last five years, at 14% per annum. Exxon Mobil definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.
Exxon Mobil Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that Exxon Mobil is a strong income stock thanks to its track record and growing earnings. The distributions are easily covered by earnings, and there is plenty of cash being generated as well. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. All in all, this checks a lot of the boxes we look for when choosing an income stock.
Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. However, there are other things to consider for investors when analysing stock performance. Taking the debate a bit further, we've identified 1 warning sign for Exxon Mobil that investors need to be conscious of moving forward. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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2023-11-13 10:15:06Z
CBMiTWh0dHBzOi8vZmluYW5jZS55YWhvby5jb20vbmV3cy9leHhvbi1tb2JpbC1ueXNlLXhvbS1pbmNyZWFzaW5nLTEwMTUwNjIzNi5odG1s0gFVaHR0cHM6Ly9maW5hbmNlLnlhaG9vLmNvbS9hbXBodG1sL25ld3MvZXh4b24tbW9iaWwtbnlzZS14b20taW5jcmVhc2luZy0xMDE1MDYyMzYuaHRtbA
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