3. Exxon Mobil Corporation (NYSE:XOM)
Consecutive Years of Dividend Payments: 142
Exxon Mobil Corporation (NYSE:XOM) ranks third on our list of the best dividend zombies. The American energy company benefits a lot from expanding its production capacity. The company recently completed the acquisition of Pioneer Natural Resources, significantly increasing its presence in the Delaware and Midland basins to 1.4 million acres. In the first quarter of 2024, the company surpassed 600,000 barrels of oil equivalent per day in Guyana and finalized the investment decision for its sixth major development project. Guyana is a crucial exploration area for the company, offering lower oil production costs of $25 to $35 per barrel. This cost efficiency is particularly profitable for Exxon Mobil Corporation (NYSE:XOM) because of its larger size and scale compared to other oil exploration companies.
Exxon Mobil Corporation (NYSE:XOM) has strengthened its balance sheet thanks to several years of profit. The company generated over $10 billion in free cash flow in the first quarter of 2024, beating analysts’ estimates by 21%. Its operating cash flow for the quarter came in at $14.7 billion. A $10 billion boost to its cash flow is an impressive return on the company’s $94 billion in capital expenditures since 2019. Despite reducing capital spending by 8.5% compared to the previous year, the company still returned $6.8 billion to shareholders through dividends and share repurchases. It also spent $5.8 billion on capital and exploration expenditures. This shareholder return and solid cash generation make Exxon Mobil Corporation (NYSE:XOM) one of the most reliable options for income investors. Additionally, the company has a minimal debt of around $40 billion and a free cash flow of $33 billion. With a debt-to-EBITDA ratio of 0.58, debt is not a concern for shareholders. The stock is trading at a forward P/E of 12.08, which appears cheap considering the company’s cash position, recent earnings, and growth outlook.
Madison Investments highlighted the strengths of Exxon Mobil Corporation (NYSE:XOM) and its outlook in its Q1 2024 investor letter.
“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)
Exxon Mobil Corporation (NYSE:XOM) offers a quarterly dividend of $0.95 per share and has a dividend yield of 3.40%, as of June 20. The company has been paying uninterrupted dividends to shareholders for the past 142 years and its dividend growth streak spans over 41 years. It is among the dividend zombies on our list.
Exxon Mobil Corporation (NYSE:XOM) was included in 81 hedge fund portfolios at the end of Q1 2024, compared with 85 in the previous quarter, according to Insider Monkey’s database. The stakes held by these hedge funds have a consolidated value of over $5.5 billion. With over 26.4 million shares, Fisher Asset Management was the company’s leading stakeholder in Q1.
