Time Is Running Out for Exxon Mobil. Why It May Be Removed From the ‘Dividend Aristocrats.’
Exxon gas station in Charlotte. Exxon Mobil is a member of an index in which companies have paid out a higher dividend for at least 25 straight years.
LOGAN CYRUS/AFP via Getty Images
Time is running out for Exxon Mobil to remain in the S&P 500 Dividend Aristocrats Index, but its earnings release Friday could settle that matter.
There are 65 S&P 500 Dividend Aristocrats, including Johnson & Johnson (ticker: JNJ), Chevron (CVX) and Target (TGT). These companies have paid out a higher dividend for at least 25 straight years.
In recent years, constrained by weak oil prices, capital spending on future growth projects and other expenses, Exxon Mobil (XOM) has kept its quarterly dividend at 87 cents a share.
It’s been doing that since shortly after the company announced dividend increase to 87 cents a share from 82 cents in April of 2019. That was the month in which it had announced dividend increases for a number of years.
In 2020, the company stayed in the Aristocrats because it paid a higher dividend on its common stock than it did in 2019—$3.48 a share versus $3.43.
But if the company doesn’t pay a higher dividend in 2021, it faces removal from the Aristocrats.
During the company’s second quarter-earnings call on July 30, CEO Darren Woods said in part that “we have always felt a very strong commitment to our base shareholders to deliver on a dividend, a reliable and growing dividend,” according to a transcript of call.
Woods added that the company was committed to “a reliable dividend and one that grows over time.”
The company on Monday declined to discuss its dividend when queried by Barron’s. Prior to 2020, Exxon Mobil had increased its dividend every year since 1982, according to a company spokeswoman last year.
An important factor likely to help Exxon Mobil’s capital returns, including its dividend, is rising oil prices.
West Texas Intermediate crude was recently at around $83 a barrel, up from around $25 in April of 2020, according to FactSet.
The stock has rallied in the past month, returning about 13% versus 2% for the S&P 500.
Even if the company doesn’t announce anything about its dividend on Friday, its board could still declare an increase a little later in the quarter and pay it to shareholders by Dec. 31. Under that scenario, Exxon Mobil would remain in the Aristocrats Index.
Write to Lawrence C. Strauss at [email protected]
