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ExxonMobil Has a 4.1% Dividend Yield, Higher Valuation

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ExxonMobil’s dividend yield

ExxonMobil (XOM) occupies the fourth position among the six dividend-yielding integrated energy stocks discussed in this series. The company has the largest market cap of ~$355 billion.

ExxonMobil’s current dividend yield is 4.1%. In the current quarter, ExxonMobil will pay a dividend of $0.82 per share. The company has paid dividends regularly for decades. In the past three years, despite earnings volatility, the dividends have risen. Three years ago, ExxonMobil made a quarterly dividend payment of $0.73 per share.

In the past three years, ExxonMobil stock has fallen 5%. ExxonMobil is the only stock in this series that posted a decline during this period. There was a sharp fall in ExxonMobil’s stock price during the fourth quarter.

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Valuations

ExxonMobil trades at a forward PE ratio of 16.8x, which is above the peer average forward PE ratio of 14.1x. The stock trades at an EV-to-EBITDA multiple of 7.4x, which is above the peer average of 5.8x.

Analysts expect ExxonMobil’s earnings to fall 12% in 2019, which is more than the peer average of -6%. However, the company has stronger financials than its peers.

ExxonMobil has comfortable leverage and a healthy liquidity position. The company’s total debt-to-total capital ratio was 16% in 2018—the lowest among its peers. In 2018, the company had a surplus cash flow from operations after covering its capex and dividend payments, which could have resulted in its premium valuations. Chevron (CVX) and Royal Dutch Shell (RDS.A) also saw surpluses in 2018. However, BP (BP) had a cash flow shortfall in 2018.

Next, we’ll discuss Chevron’s (CVX) dividend yield.

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