100 years of delivering dividends to shareholders and 28 consecutive years of increases have made global energy giant ExxonMobil (XOM) a popular stock with dividend investors.
Over that period ExxonMobil's (XOM) dividend payments to shareholders have grown at an average annual rate of 5.7% indicating a management team which is determined to reward shareholders who have also seen three stock splits since 1987.
Trading on a price to earnings (PE) multiple of 11 times earnings and offering investors a yield of 2.5%, Exxon (XOM) offers investors access to the world's largest publicly traded international oil and gas company.
The share has been an unimpressive performer over the last twelve months despite the strong rebound in global energy prices. Twelve months ago the counter was trading at $72 and despite continued gains in the equity market Exxon (XOM) is trading at $66.
Despite this flat performance on the share, management was upbeat when it delivered its third quarter estimates.
Chairman Rex W. Tillerson told investors: "Despite continuing economic uncertainty, we had strong quarterly results and continued to advance our robust investment opportunities. Third quarter earnings were $7.4 billion, up 55% from third quarter of last year due to higher crude oil and natural gas realizations, improved refining margins, and solid chemical results."
Tillerson pointed out that during the quarter ExxonMobil (XOM) had returned $5bn to shareholders through dividend payments and share repurchases.
Earnings for the quarter came in at $7.35bn, an increase of 55% from the third quarter of 2009, while earnings per share were $1.44, an increase of 47%.
During the quarter, Exxon Mobil (XOM) purchased 54 million shares of its common stock for the treasury at a gross cost of $3.3bn (average price of $61 each). This is likely to be earnings enhancing for the group.
Operationally there were two major achievements for the group. Firstly production began from the Odoptu field in Russia came online and secondly the company announced the commissioning of new units to produce ultra low sulfur diesel at its Baytown, Texas and Baton Rouge, Louisiana refineries. This will enable ExxonMobil (XOM) to increase the supply of ultra low sulfur diesel by over 3m gallons a day.
Dividend investing is about buying into businesses which have solid long-term sustainable cash flows and management who are supportive of returning excess cash to shareholders. The track record of ExxonMobil (XOM) shows that while the yield may not be as attractive as some of its peers at first glance, the company is in the business of keeping investors front-of-mind.
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