SHEL - Dividend Corner: Is ExxonMobil a good dividend stock amid sluggish oil trading?

2023-05-10 10:15:13 ET

In an uncertain market, dividend-based positions can provide a sense of security. ExxonMobil ( NYSE: XOM ) represents a perennially popular dividend name. However, does the oil giant hold up at a time when crude prices have shown sluggish trading?

The Irving, Texas-based multinational oil and gas corporation has climbed 2.7% for 2023 as a whole. However, the stock has been losing ground lately, coming down 9% since it's year-to-date peak, which was seen back in late April.

ExxonMobil’s latest slide follows a recent drop in oil prices. Crude now trades near $73/bbl, off by 12% compared to a level of $83.50/bbl reached just last month. Choppy oil trading in the past few months have also seen crude dip below $70 a barrel at times.

Even with these recent swings in its stock price, how does XOM stack up as a dividend play? For a better understanding of ExxonMobil’s value on this front, here are some details about its dividend profile, as determined by Seeking Alpha's Quant Rating system, which uses quantifiable measures to compare stocks to other similar investment opportunities:

Exxon Dividend Yield:

Seeking Alpha’s analytics provided XOM with a C- as it pertained to XOM’s dividend yield grade. Currently, ExxonMobil is attached the dividend yield of 3.34%, which is slightly below the sector median of 3.81%.

See below a breakdown of the stock's dividend yield grade :

Exxon Dividend Growth:

Regarding ExxonMobil’s dividend growth, the oil giant received an A+, according to Seeking Alpha's Quant ratings. This came despite having a one-year dividend growth rate that underperformed against its broader industry rivals.

Here's a breakdown of ExxonMobil’s dividend growth grade :

Exxon Dividend Safety:

XOM is dependable in terms of dividend safety. According to Seeking Alpha’s metrics, the stock received a B for this key area of concern.

See a breakdown of XOM’s dividend safety grade :

Exxon Dividend History:

Looking at the overall consistency of dividends, the energy firm has offered decades of payments and growth. Seeking Alpha has labeled XOM with an A as it pertains to its dividend history.

See a breakdown of ExxonMobil’s dividend consistency grade :

What Others Say about Exxon Stock:

Beyond the dividend offering, does XOM offer a compelling buying opportunity in general, given the current market landscape?

Christopher Robb, a Seeking Alpha analyst, believes XOM is a Buy . "Exxon had a record first quarter in 2023 after an extraordinarily strong year," Robb stated. "It had a staggering net income of $11.4 billion. The firm continues to cut costs and show discipline in tailoring its industry-leading upstream portfolio."

At the same time, Zen Analyst, another SA contributor, says the energy stock is a Hold , arguing: "Exxon Mobil's potential acquisition of Pioneer could solidify its dominance in the Permian Basin but also expose the company to long-term risks associated with a heavy reliance on fossil fuels."

Other Investing Options:

For market participants who remain unsure about XOM, exchange traded funds provide exposure to the company in a more diversified way. ExxonMobil is currently owned by 320 ETFs. Here are the five funds that have the most significant weightings towards the energy giant (listed with their weightings within the fund):

• Energy Select Sector SPDR Fund ( XLE ) at 23.67%.
• Vanguard Energy ETF ( VDE ) at 22.80%.
• iShares U.S. Energy ETF ( IYE ) at 22.59%.
• Strive U.S. Energy ETF ( DRLL ) at 22.15%.
• Fidelity MSCI Energy Index ETF ( FENY ) at 21.93%.

At the same time, investors can also look at some of XOM's closest competitors, which includes the likes of Chevron Corporation ( CVX ), Shell plc ( SHEL ), TotalEnergies ( TTE ), BP p.l.c. ( BP ), and Equinor ASA ( EQNR ).

Furthermore, for investors who are looking for broad exposure to dividends, there are many general dividend ETFs to consider as well. Some names include:

• Vanguard Dividend Appreciation ETF ( VIG )
• Vanguard High Dividend Yield Index ETF ( VYM )
• Schwab US Dividend Equity ETF ( SCHD )
• iShares Core Dividend Growth ETF ( DGRO )
• SPDR S&P Dividend ETF ( SDY )
• iShares Select Dividend ETF ( DVY )

For further analysis, see ExxonMobil’s complete dividend score card here.

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