6. Exxon Mobil Corporation (NYSE:XOM)
AQR Capital’s Stake Value: $410,117,578
Dividend Yield as of August 22: 3.33%
An American energy company, Exxon Mobil Corporation (NYSE:XOM) continued to be a favored choice for AQR Capital. The hedge fund significantly increased its stake in the company by 106% during the second quarter of 2024. The fund owned over 3.5 million shares in the company, valued at over $410 million. The company represented 0.62% of the firm’s 13F portfolio.
Exxon Mobil Corporation (NYSE:XOM) is one of the most popular energy stocks among investors because the company gains a lot from its acquisitions. Earlier in May, the company completed its acquisition of Pioneer Natural Resources. The transaction involved issuing 545 million ExxonMobil shares, valued at $63 billion at the time, and assuming $5 billion in debt. This merger created the world’s largest potential for high-return unconventional resource development. Following the acquisition, the company increased its annual share repurchase program to $20 billion through 2025, contingent on favorable market conditions. The company plans to repurchase over $19 billion worth of shares in 2024.
Madison Investments highlighted a strong business momentum for Exxon Mobil Corporation (NYSE:XOM) in its Q1 2024 investor letter. Here is what the firm has to say:
“This quarter we are highlighting Exxon Mobil Corporation (NYSE:XOM) as a relative yield example in the Energy sector. XOM is a leading integrated oil and natural gas company. It has upstream assets that develop and produce oil and natural gas, along with downstream refining and chemical manufacturing assets. We believe it has attractive low-cost acreage in the Permian basin and has a sizeable growth opportunity in Guyana. Further, we think XOM has a sustainable competitive advantage due to size and scale, and its ability to integrate refining and chemical assets provides a low-cost advantage versus competitors.
Our thesis on XOM is that it will grow production volumes of oil and gas moderately over the next few years, while limiting excessive capital investment that plagued the industry from 2014-2020. Production growth will come from its 2023 acquisition of Pioneer Natural Resources, which is the largest producer in the Permian basin. XOM plans to double its Permian output by 2027, to 2 million barrels per day. Capital spending will be limited to $20-25 billion per year through 2027, which should allow for significant amounts of cash to be returned to shareholders including a $35 billion share repurchase program and continued dividend increases. Higher oil prices would provide a tailwind to our thesis but are not necessary. We think XOM can grow earnings and cash flow if oil prices remain above $60 per barrel…” (Click here to read the full text)
In addition to its acquisitions, Exxon Mobil Corporation (NYSE:XOM)’s cash flow makes it one of the best dividend-paying stocks on our list. In the second quarter of 2024, the company generated $10.6 billion in operating cash flow and its free cash flow for the period came in at $15.2 billion. The company also returned $4.3 billion through dividends to shareholders. It offers a quarterly dividend of $0.41 per share and has a dividend yield of 3.33%, as of August 22. The company holds a 41-year track record of consistent dividend growth.
The number of hedge funds owning stakes in Exxon Mobil Corporation (NYSE:XOM) grew to 92 in Q2 2024, from 81 in the previous quarter, as per Insider Monkey’s database. The stakes held by these hedge funds have a collective value of nearly $6.2 billion.
