Exxon Mobil (XOM): A Top Dividend Aristocrat with Over 3% Yield

Exxon Mobil (XOM) stands out as one of the most reliable dividend aristocrats in the energy sector, offering investors a compelling combination of stability, growth, and a yield that consistently exceeds 3%. As of March 2025, Exxon Mobil's dividend yield is 3.51%, making it an attractive option for income-focused investors. This yield, coupled with the company's strong track record of dividend increases, positions exxon mobil as a top choice for those seeking steady returns in a volatile market.



Historical Performance and Dividend Growth

Exxon Mobil's dividend payout ratio for the fiscal year ended in December 2024 was 0.49, calculated as Dividends per Share (A: Dec. 2024) / EPS without NRI (A: Dec. 2024) = 3.84 / 7.79. This ratio is better than 56.17% of 454 companies in the Oil & Gas industry, with an industry median of 0.56. This indicates that Exxon Mobil is paying out a smaller proportion of its earnings as dividends compared to its peers, which could imply that the company has more room for future dividend growth. Additionally, Exxon Mobil's Dividend Payout Ratio has been relatively stable over the past few years, ranging from 0.25 to 0.65, with a median of 0.66. This stability suggests that the company has a consistent dividend policy and is committed to maintaining its dividend payments.

Exxon Mobil's dividend growth rate has been impressive. During the past 12 months, the average Dividends Per Share Growth Rate was 4.30% per year. This consistent growth indicates the company's commitment to increasing dividends, which is a key characteristic of dividend aristocrats. The company's ability to maintain this growth rate, even during economic downturns, will be crucial for sustaining its dividend aristocrat status.

Industry Position and Capital Structure

Exxon Mobil's bellwether status in the energy space, optimal integrated capital structure, and management's track record of capex discipline make it a relatively lower-risk energy sector play. The company owns some of the most prolific upstream assets globally and has the largest global refining operations, substantial chemicals assets, and a strong dividend history and credit profile. This strong industry position and capital structure provide a buffer against economic downturns and industry disruptions.



Factors to Consider for Future Sustainability

While Exxon Mobil's dividend payout ratio and yield are attractive, investors should consider several factors when evaluating the company's ability to maintain its dividend aristocrat status in the face of potential economic downturns or industry disruptions.

1. Historical Dividend Payout Ratio Volatility: Exxon Mobil's Dividend Payout Ratio has shown significant volatility over the past 13 years, with a range from 0.25 to 1.59. The current ratio is 0.49, which is below the median of 0.66. This historical data indicates that the company has the flexibility to adjust its payout ratio in response to changing economic conditions.

2. Earnings Stability: The company's earnings stability is another important factor. Exxon Mobil's earnings per share (EPS) have shown variability, but the company has managed to maintain a relatively stable dividend payout. For example, the Dividend Payout Ratio for the quarter that ended in December 2024 was 0.59, calculated as "Dividend Payout Ratio = Dividends per Share (Q: Dec. 2024 ) / EPS without NRI (Q: Dec. 2024 ) = 0.99 / 1.67 = 0.59." This indicates that the company has the earnings capacity to support its dividend payments even during periods of lower earnings.

3. Management's Track Record: Exxon Mobil's management has a track record of disciplined capital spending and allocating a significant proportion of its budget to key oil and gas projects. This discipline can help the company navigate economic downturns and industry disruptions by ensuring that it has the financial resources to maintain its dividend payments.

Conclusion

Exxon Mobil's strong dividend yield, consistent growth, and stable payout ratio make it one of the best dividend aristocrat stocks with over 3% yield. While the company faces potential challenges from economic downturns and industry disruptions, its strong industry position, disciplined capital spending, and management's track record provide a solid foundation for maintaining its dividend aristocrat status. Investors seeking steady income and growth should consider Exxon Mobil as a key component of their portfolio.

Ask Aime: How does Exxon Mobil's dividend yield and payout ratio compare to its industry peers, and how does its financial discipline and management track record support its status as a dividend aristocrat?