Oil major ExxonMobil (XOM) has raised its quarterly dividend payment to shareholders by 4% even though it reported mixed financial results for this year’s third quarter.
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The Texas-based company said that going forward, it will pay a quarterly distribution of $1.03 per share, up 4% from $0.99 currently. After the increase, ExxonMobil will have a dividend yield of 3.60%. The company has increased its dividend for 43 consecutive years, making it a Dividend Aristocrat, a term applied to any company that has paid a higher dividend annually for at least 25 years.
The dividend increase was announced alongside uneven third-quarter financial results. ExxonMobil posted earnings per share (EPS) of $1.88, which topped the consensus estimate of $1.82. However, revenue of $85.3 billion fell short of Wall Street’s forecast of $86.5 billion in sales.
Oil Prices
Management at ExxonMobil blamed the mixed print on falling oil prices, which are currently below $65 a barrel. U.S. oil prices have sunk 16% so far this year. However, despite the weak crude prices, ExxonMobil remains in growth mode. The company’s daily production rose to 4.77 million barrels from 4.58 million barrels in last year’s third quarter.
Analysts were quick to note that ExxonMobil’s quarterly dividend payouts are far outpacing its free cash flow. In the third quarter, ExxonMobil’s distributions (dividends and stock buybacks combined) totaled $9.4 billion while its free cash flow was $7.5 billion. Its net debt grew more than $3 billion in the quarter.
Is XOM Stock a Buy?
The stock of ExxonMobil has a consensus Moderate Buy rating among 19 Wall Street analysts. That rating is based on 12 Buy and seven Hold recommendations issued in the last three months. The average XOM price target of $127.58 implies 12.30% upside from current levels.
