Exxon Mobil's Dividend Yield Hits 10%: What Investors Need To Know
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Exxon Mobil's dividend yield has continued to rise in a year that the stock has fallen by more than 50%.
What Happened: Exxon Mobil Corporation's XOM dividend yield is sitting above 10% as of Thursday.
The company paid out a dividend of 87 cents in September. Based on the ex-dividend date of Aug. 12, the annual dividend rate was 7.9%.
The dividend yield was 7.9% and 5.8% at the ex-dividend dates of the other dividends paid in 2020.
In 2019, all four ex-dividend dates were at yields of 5% or less. In 2018, all four dates were 4.1% or less.
Charts dating back to 1989 show that Exxon Mobil's dividend yield is at its highest-ever level.
What’s Next: Exxon Mobil has a history of raising its quarterly dividend payout.
The 87-cent quarterly payout has stayed the same for six straight quarters.
Since 2008, ExxonMobil has never had the same quarterly dividend payout for more than four straight quarters.
MKM Partners analyst John Gerdes has suggested ExxonMobil may need to raise $15 billion in debt to support its dividend over the next two years.
Options trading trends are also pointing to a potential dividend cut this year or the next.
XOM Price Action: Shares of ExxonMobil were down 0.2% at $34.32 at the close Thursday.
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1) $15 billion isn't a lot with regards to Exxon's balance sheet or revenues 2) Exxon's credit is better than most of its competitors if not outright better. It can certainly fund it and still be in their industry's range of debt levels. 3) Over the next two years, oil's outlook will either get better or a lot of competitors will be a lot worse off than Exxon.
Thus debt isn't the real issue here, it's where oil will head in the near term. People claiming the end of the world for Exxon are gravely mistaken about that.
All these oil companies will eventually be in trouble with as alternative energy becomes more affordable and popular.
They will become more affordable and hopefully the big oil companies will be energy companies. Exxon went this way long ago investing in hydroelectric power. If alt energy gets this affordable I think at least Exxon will expand into it. Right now solar technology and the business is still volatile and power is still generated from oil if were lucky and coal if we aren't. The amount of energy for clean energy to replace is huge. It can't even grow fast enough to offset global demand and sadly coal is still being bunt in mass globally for electricity.
It will be a long while before oil is obsolete, but it will happen over time. The best hope to get off oil is for prices to rise not fall. This is what is hurting the clean energy market.