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This is Why Exxon Mobil (XOM) is a Great Dividend Stock
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Exxon Mobil in Focus
Exxon Mobil (XOM - Free Report) is headquartered in Irving, and is in the Oils-Energy sector. The stock has seen a price change of -7.2% since the start of the year. The oil and natural gas company is paying out a dividend of $0.82 per share at the moment, with a dividend yield of 4.23% compared to the Oil and Gas - Integrated - International industry's yield of 2.3% and the S&P 500's yield of 2%.
Looking at dividend growth, the company's current annualized dividend of $3.28 is up 7.2% from last year. In the past five-year period, Exxon Mobil has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.67%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Exxon's current payout ratio is 86%, meaning it paid out 86% of its trailing 12-month EPS as dividend.
XOM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $4.63 per share, which represents a year-over-year growth rate of 28.97%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that XOM is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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This is Why Exxon Mobil (XOM) is a Great Dividend Stock
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But for income investors, generating consistent cash flow from each of your liquid investments is your primary focus.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Exxon Mobil in Focus
Exxon Mobil (XOM - Free Report) is headquartered in Irving, and is in the Oils-Energy sector. The stock has seen a price change of -7.2% since the start of the year. The oil and natural gas company is paying out a dividend of $0.82 per share at the moment, with a dividend yield of 4.23% compared to the Oil and Gas - Integrated - International industry's yield of 2.3% and the S&P 500's yield of 2%.
Looking at dividend growth, the company's current annualized dividend of $3.28 is up 7.2% from last year. In the past five-year period, Exxon Mobil has increased its dividend 5 times on a year-over-year basis for an average annual increase of 4.67%. Looking ahead, future dividend growth will be dependent on earnings growth and payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Exxon's current payout ratio is 86%, meaning it paid out 86% of its trailing 12-month EPS as dividend.
XOM is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2018 is $4.63 per share, which represents a year-over-year growth rate of 28.97%.
Bottom Line
Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. But, not every company offers a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that XOM is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).