Today Exxon announced a $0.02 per share increase in their quarterly dividend bringing the new quarterly amount to $0.75 per share. This represents a 2.73% increase and is the 34th consecutive year of increases. Needless to say a pretty solid history. Going back the last decade, this means XOM dividend has grown at a rate of 8.89% per year. Your dividend income from the stock would have more than doubled, at the same time gotten some pretty nice growth in the stock price.
If you haven’t yet, check out my excellent write up (if I do say so myself) on Dividends and Yield on Cost. I use XOM as a personal example and calculate total return of the stock vs the S&P 500.
A year ago, I would have expected an increase on the dividend to be in the range of 4 to5 cents a share for 2016, but that was when oil was still near $100. So honestly, with the huge drop in the price of a barrel, I was only expecting a token $0.01 increase to keep the streak alive (something I thought CVX would do last year, but didn’t).
The increase comes in a time when most upstream, downstream, integrated oils companies are struggling to maintain their dividend and in a lot of cases needing to slash their payout. So, I’ll take this 2 cent increase as a win.
The increase also comes a day after Standard & Poor’s cut the credit rating on XOM debt. All I have to say about all of the credit rating agencies is that they were the ones saying MBS were safe and secure in ’07 and ’08. Basically, they are a joke.
XOM reports earnings April 29th, I have no clue what to expect and looking at analyst estimates, neither do they.
I am long XOM, and don’t expect prices to stay low throughout my lifetime. Short term volatility in the price of a barrel, yes. Nothing happening in the Middle East forever, I wouldn’t count on it. As the price of oil rebounds down the road, so should the rate of increases on the XOM dividend.
For those keeping score at home, today marks 20 of my holdings announcing increases so far on the year, and just 1 with a cut.
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