In this article, we discuss the 5 dividend aristocrats that hedge funds love. To take a look at some more dividend aristocrats and the latest market figures around dividend stocks, go directly to 10 Dividend Aristocrats Hedge Funds Love.
5. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 71
Exxon Mobil Corporation (NYSE:XOM) is the second-largest oil company in the world, and is based in Texas, United States. As of March 16, its dividend yield stands at an impressive 4.56%, with the firm having grown its dividend payout for 38 consecutive years making it an attractive dividend aristocrat for hedge funds to buy.
Hedge funds were seen buying up on Exxon Mobil Corporation (NYSE:XOM) shares, as 71 hedge funds out of 924 tracked by Insider Monkey were long on the company shares by the end of December, with combined stakes worth $5.38 billion. This is up from 64 hedge funds in the preceding quarter. GQG Partners held 32.4 million shares in Exxon Mobil Corporation (NYSE:XOM) over the fourth quarter, worth $1.98 billion and representing a 22% increase in holding from the previous quarter.
On March 7, MKM Partners analyst John Gerdes raised the firm’s price target on Exxon Mobil Corporation (NYSE:XOM) to $84 from $81 and maintained a ‘Buy’ rating on the shares, noting that the energy company could generate around $40.2 billion of free cash flows in 2022, assuming approximately $21.6 billion in net capital expenditures for the year. He also cited the company’s strong production outlook and modestly higher international natural gas prices that are partly offset by higher operating expenses. As of March 16, shares of Exxon Mobil Corporation (NYSE:XOM) have surged 29.58% in the last 12 months, and 39.47% in the last 6 months.
In Q4 2021, Exxon Mobil Corporation (NYSE:XOM) reported an EPS of $2.05, which was above consensus estimates by $0.11. Quarterly revenue stood at $84.97 billion, outperforming estimates by $6.24 billion and representing an increase of 82.56% year-on-year.
Investment firm Goehring & Rozencwajg Associates mentioned Exxon Mobil Corporation (NYSE:XOM) in its Q3 2021 investor letter. Here’s what the hedge fund said:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publically expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
