We recently published a list of 12 Best Fortune 500 Dividend Stocks To Buy Right Now. In this article, we are going to take a look at where Exxon Mobil Corporation (NYSE:XOM) stands against other best Fortune 500 dividend stocks to buy right now.
Compiled and published by Fortune Magazine, the Fortune 500 is an annual list that ranks the biggest US companies by revenue. In total, the Fortune 500 companies represent two-thirds of the US GDP with $18.8 trillion in revenues, $1.7 trillion in profits, and $43 trillion in market value (as of March 28, 2024), and they employ a workforce of 31 million around the globe.
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2024 proved to be a big year for large-cap stocks, as the broader US market achieved gains of nearly 25%, piggybacking on a 26% performance the year before. Large-cap stock funds, with the heaviest tilt toward growth stocks, performed the best last year, even as the market’s rally somewhat broadened from the handful of mega tech companies that have led much of the bull market.
However, the tailwinds that propelled the market to new heights are beginning to recede, as the rate of monetary policy easing slows down, long-term interests swing upward, inflation becomes sticky, and the US economy is slowing down. Moreover, the upcoming presidency of Donald Trump and his much-rumored tariffs could also herald a more volatile period for markets, as they could further fan inflation fears and put pressure on stock prices.
That said, the expected upcoming fluctuation isn’t going to be something that the mega corporations haven’t dealt with before. A 2023 report by J. P. Morgan revealed that despite the considerable volatility during the period, large-cap stocks gained around 162% between 2013 and 2023, galvanized primarily by big tech. Another 2023 report by CNBC unveiled that large US companies outperformed other investments between 2003 and 2023, with average returns of 9.3%. However, it hasn’t always been a smooth ride, as despite the stability and reliability large-cap stocks are known for, investors had to survive drops of 56.8% during the 2007-2009 bear market, 33.9% in 2020, and 25.4% in 2022.
In addition to the few tech giants regularly making headlines with their gains, large-cap dividend stocks could also be an attractive option for investors looking for a reliable, significant, and growing stream of income. According to Howard Silverblatt, Senior Index Analyst at S&P Dow Jones Indices, the broader US large caps are expected to post an 8% increase in dividend payments in 2025, compared to the 6.4% uptick in 2024, 5.1% gains in 2023, and the 10.8% increase witnessed in 2022.
Large-cap companies tend to have more robust balance sheets compared to their smaller counterparts, enabling them to navigate through market fluctuations more smoothly while also returning value to their shareholders. Corporations in the US have continuously grown their considerable cash stockpiles since the beginning of the pandemic, thanks to the economic resilience we have witnessed recently. A report from treasury advisory firm Carfang Group revealed that as of Q1 2024, US corporations increased their cash holdings to an all-time high of $4.11 trillion, up 12.6% from the same period in 2024 and $1.28 trillion more from their pre-pandemic levels.
Methodology
To collect data for this article, we referred to the top 50 companies among the Fortune Global Rankings. Then, we picked out 12 US-listed companies with the highest dividend yields as of January 13, 2025, and ranked them by their number of hedge fund investors according to the Insider Monkey database as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Aerial view of a major oil rig in the middle of the sea, pumping crude oil.
Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 86
Dividend Yield: 3.72%
Market Cap: $490.1 billion
Exxon Mobil Corporation (NYSE:XOM) is one of the largest publicly traded energy providers and chemical manufacturers in the world. The company engages in the exploration for, and production of, crude oil and natural gas, as well as the manufacture, trade, and transportation of crude oil, natural gas, petroleum products, and petrochemicals. With operations in more than 60 countries around the globe, the oil giant gains a significant competitive edge due to its diversified world-class asset portfolio.
Though it is hands-down one of the leaders of the global fossil fuel sector, Exxon Mobil Corporation (NYSE:XOM) is also ramping up its investments in lower-carbon energy. The company recently unveiled its 2030 vision, a significant aspect of which is the pursuit of up to $30 billion of low emissions opportunities in the 2025 to 2030 timeframe. The oil major recently secured the largest offshore carbon dioxide storage site in the US through an agreement with the Texas General Land Office. Moreover, Exxon is working on what would be the biggest low-carbon hydrogen production facility in the world, with the capacity to produce up to 1 billion cubic feet of hydrogen per day.
In May 2024, Exxon Mobil Corporation (NYSE:XOM) announced the acquisition of Pioneer Natural Resources in a $59.5 billion all-stock deal, the largest deal in the energy sector in the last 8 years. The acquisition, which was a strategic move from the oil giant to bolster its presence in the Permian Basin, has already started to bear fruit as Exxon has used it to offset the effect of the decline in average oil prices during the quarter, registering the first impact of the new asset.
In Q3 of 2024, Exxon Mobil Corporation (NYSE:XOM) increased its production to 4.6 million oil-equivalent barrels per day, up 24% YoY. Q3 was Exxon’s first full quarter with Pioneer, which added 770,000 oil-equivalent barrels per day of highly advantaged production. The company is also improving the profitability of the barrels it produces and has doubled its unit earnings per oil-equivalent barrel from $5 in 2019 to $10 in the first nine months of 2024.
Exxon Mobil Corporation (NYSE:XOM) also reported a strong financial position in Q3 2024, achieving an operating cash flow of $17.6 billion, with its free cash flow at $11.3 billion. The company returned $26.1 billion to its shareholders in the form of dividends and share repurchases during the quarter, with plans to repurchase over $19 billion of shares by the end of 2024. Moreover, Exxon has increased its annual dividend for 42 consecutive years and announced a quarterly dividend of $0.99 in November.
With 86 elite money managers tracked by IM holding a stake in the company at the end of Q3 2024, Exxon Mobil Corporation (NYSE:XOM) is placed among the Top 12 Oil and Gas Stocks To Invest In According to Hedge Funds.
Overall, XOM ranks 4th on our list of best Fortune 500 dividend stocks to buy right now. While we acknowledge the potential for XOM as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than XOM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
