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ExxonMobil Has a 4.7% Dividend Yield, Higher Valuation

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ExxonMobil’s dividend yield

Whereas ExxonMobil’s (XOM) dividend yield is the fourth highest among the six integrated energy stocks we’re looking at, it has the largest market cap, of ~$314 billion. The company’s dividend yield has risen to 4.7% from 4.2% in Q2 2018 due to its dividends rising and its stock price falling.

ExxonMobil’s dividend is set to rise 6% year-over-year this quarter to $0.87 per share. Its stock has fallen 10% in the last year and 8% this quarter. Royal Dutch Shell’s (RDS.A), BP’s (BP), and Total’s (TOT) dividend yields are higher, at 6.0%, 5.9%, and 5.4%, respectively.

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Valuation

ExxonMobil’s forward PE multiple is 16.1x, above peers’ average of 12.4x. Its forward EV[1.enterprise value]-to-EBITDA multiple of 6.9x is also above peers’ average of 5.4x. The company has strong financials and a large upstream portfolio.

In Q1 2019, ExxonMobil solidified its upstream portfolio and strengthened its key positions in offshore Guyana and the Permian Basin, advancing on its long-term growth path. However, the company’s earnings fell and missed estimates.

Analysts expect ExxonMobil’s earnings to fall 17% this year, and BP’s to fall 8%. However, they expect Shell’s and Total’s earnings to rise 10% and 7%, respectively. Among peers, ExxonMobil has a lower dividend yield, higher valuation, and larger expected earnings decline.

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