ExxonMobil is among the scarcely fewer than 4% of S&P 500 constituents to accomplish this uncommon accomplishment.
ExxonMobil is among the scarcely fewer than 4% of S&P 500 constituents to accomplish this uncommon accomplishment.
The oil sector has seen its fair share of fluctuations throughout the years. Crude prices have experienced dramatic fluctuations, even dipping into negative territory during the pandemic, only to soar into triple digits post-Russia's invasion of Ukraine. This unpredictable price swings have posed challenges for numerous oil corporations in maintaining their dividends, let alone boosting them.
But ExxonMobil's (XOM, -0.68%) dividend heritage stands out as an exception. The oil titan has managed to enhance its dividend on a yearly basis for over four decades. This achievement places it in an exclusive club, not only among oil stocks but also within the S&P 500.
Dividend veteran
ExxonMobil recently posted its third-quarter results and declared its latest dividend distribution. The oil giant's results demonstrated remarkable performance, eclipsing the fact that it increased its dividend once more. The company hiked its payout by 4% for the fourth quarter to $0.99 per share. This additional extension of its dividend growth streak.
CEO Darren Woods underscored ExxonMobil's dividend prowess during the oil giant's third-quarter earnings conference call:
We've extended our annual dividend growth streak for 42 years in a row, placing us in an elite category of companies known as Dividend Aristocrats® (the term Dividend Aristocrats® is a registered trademark of Standard & Poor's Financial Services LLC). Less than 4% of S&P 500 companies have boosted their dividends every year for more than 40 years. ... We recognize the importance of the dividend to our investors, particularly our millions of retail shareholders. We remain dedicated to a sustainable, competitive, and growing dividend, which serves as a significant component of the attractive total shareholder return we are delivering.
Exxon's CEO noted that it has increased its payout for more than four decades consecutively, an accomplishment fewer than 4% of S&P 500 members have achieved. Partly due to the limited longevity of many companies, yet also due to ExxonMobil's ability to deliver robust results across various economic cycles. ExxonMobil has consistently maintained a robust balance sheet, which permits it to continue investing in expanding its business and increasing its dividend during periods of lower oil prices. The company also boasts an integrated business model, producing oil and gas, operating midstream infrastructure, and operating downstream refining and chemical assets, which partially mitigates the volatility of oil and gas prices and optimizes the value of every hydrocarbon molecule it produces.
A prominent dividend distributor
Woods also emphasized another notable aspect of Exxon's dividend during the call, saying, "We've also preserved our position among the top five dividend payers among all S&P 500 companies." Exxon disbursed $4.2 billion in dividends during the second quarter and $12.3 billion through the year. In part due to its considerable payout, Exxon currently offers a dividend yield beyond 3%, which is also attractive relative to the S&P 500's current yield of less than 1.5%.
Exxon possesses the financial means to cover its substantial dividend payout. The company generated $42.8 billion in cash flow from operations within the first nine months of the year, and $26.4 billion in free cash flow after funding the capital expenditures required to sustain and grow its business. Exxon returned $26.1 billion in cash to shareholders via dividends and share repurchases. Despite this significant cash return, Exxon preserves an elite balance sheet, boasting a cash balance of $27 billion and a low 5% net debt-to-capital ratio. This offers it tremendous flexibility to weather potential future challenges in the oil market. It can continue enhancing its dividend and investing heavily in expanding its business during an extended period of significantly lower oil prices.
An elite dividend stock
ExxonMobil has delivered more than four decades of uninterrupted dividend growth, a rarity within the S&P 500 membership. It also ranks among the largest dividend payers and offers an above-average yield. These factors make it an excellent choice for long-term dividend investors, given ExxonMobil's highly conservative financial profile, which should empower it to continue increasing its business and dividend in the future.
- Despite the volatility in the oil market, ExxonMobil's consistent financial performance enabled it to continue investing money in expanding its business and boosting its dividend, highlighting its strength in finance and investing.
- ExxonMobil's divident growth streak of over four decades, coupled with its position as one of the top five dividend payers in the S&P 500, makes it an attractive option for investors seeking stable income, demonstrating its excellence in finance and dividend distribution.