General Electric Company (GE) vs. Exxon Mobil Corporation (XOM): Which Dow (.DJI) Stock’s Dividend Dominates?

Round three: power
It’s not that hard to commit to paying back shareholders, but are these payments enticing or merely token? Let’s take a look at how both companies have maintained their dividend yields over time as their businesses and share prices grow:

GE Dividend Yield data by YCharts.

General Electric Company (NYSE:GE) squeaks ahead in this one, as it has remained in the lead for nearly the entire five-year period, regardless of that big spike during its share-price meltdown.

Round four: strength
A stock’s yield can stay high without much effort if its share price doesn’t budge, so let’s take a look at the growth in payouts over the past five years. If you bought in several years ago and the company has grown its payout substantially, your real yield is likely look much better than what’s shown above.

GE Dividend data by YCharts.

Round five: flexibility
A company — even one as well-positioned as GE or Exxon Mobil Corporation (NYSE:XOM) — needs to manage its cash wisely to ensure that there’s enough available for tough times. Paying out too much of free cash flow in dividends could be a warning sign that the dividend is at risk, particularly if business weakens. This next metric analyzes just how much of their free cash flows our two companies have paid out in dividends over the past several quarters:

GE Cash Div. Payout Ratio TTM data by YCharts.

It’s a tie! There aren’t many other direct comparisons we can use as a tiebreaker, but we can examine financial stability through each company’s debt-to-equity ratio. A lower ratio implies a stronger balance sheet, which will grant a company more freedom to sustain its dividend during difficult times. On this measure, there’s no contest:

GE Debt to Equity Ratio data by YCharts.

Do you agree with this analysis, or does General Electric Company (NYSE:GE) have a brighter future regardless of its recent stumble? No matter which company you choose, you’re likely to get a stable payout for many years to come. However, if you have limited resources, it can be smart to allocate what you have to a stronger stock — which, in this case, is Exxon Mobil Corporation (NYSE:XOM) by a hair.

The article General Electric vs. ExxonMobil: Which Dow Stock’s Dividend Dominates? originally appeared on Fool.com and is written by Alex Planes.

Fool contributor Alex Planes has no position in any stocks mentioned. The Motley Fool owns shares of General Electric Company.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.