Exxon Mobil Corporation (XOM) engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. Exxon Mobil is a component of the Dow Jones Industrials and the dividend aristocrats indexes. Exxon Mobil has paid uninterrupted dividends on its common stock since 1882 and increased payments to common shareholders every year for 28 years.The most recent dividend increase was in April 2011, when the Board of Directors approved a 6.80% increase to 47 cents/share. The major competitors of Exxon Mobil include Chevron Corp (CVX), British Petroleum (BP) and Royal Dutch Shell (RDS-B). This article was written by Dividend Growth Investor. If you enjoyed this article, please subscribe to my feed [RSS], or have future articles emailed to you [Email] or follow me on Twitter [Twitter].
Over the past decade this dividend growth stock has delivered an annualized total return of 9.60% to its loyal shareholders.
The company has managed to deliver an increase in EPS of 12.30% per year since 2001. Analysts expect Exxon-Mobil to earn $8.28 per share in 2011 and $8.85 per share in 2012. This would be a nice increase from the $6.22/share the company earned in 2010. On average the company has managed to repurchase 4.20% of its stock annually over the past decade. Exxon Mobil has one of the largest and most consistent stock buyback programs in the US.
The annual dividend payment has increased by 7.40% per year since 2001, which is lower than the growth in EPS.
A 7% growth in distributions translates into the dividend payment doubling every ten years. If we look at historical data, going as far back as 1970, we see that Exxon Mobil has managed to double its dividend every ten and years on average.
Over the past decade the dividend payout ratio has generally followed a downward trend. This indicator spiked up on a few occasions mainly due to short term weakness in EPS caused by declines in oil and gas prices. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
Currently Exxon Mobil is trading at 14.10 times earnings, yields 2.10% and has a sustainable dividend payout. Despite rising oil prices, and the low P/E ratio, the company has a very stingy dividend payout in comparison to its peers. As a result, I would only consider adding to my position in the stock on dips below $75.
Full Disclosure: Long CVX, XOM, RDS-B
2 days ago
