So, with free cash flow being generated, Exxon should massively increase its share repurchase program. 2020 InvestorPlace Media, LLC. My analysis, which I detail in the following paragraphs, shows there is no reason for Exxon's management to cut the dividend. Exxon won't cut the dividend. It could be multiple years before the airline industry – a key end market for oil producers – gets back to its 2019 self. I suspect that this is possible if XOM fell another 20% over the next quarter. Exxon Mobil (NYSE: XOM) shares are down 52% in 2020.With Exxon Mobil stock now trading at just 21 times forward earnings with a 10.5% dividend, a new debate is … However, according to Seeking Alpha, the prospects for next year are much more sanguine. As a shareholder, that is a one—and possibly the only—justifiable use of Exxon's cash, which is partially mine. If oil is unpopular in the public markets, then exit them. 9 New-on-Robinhood Stocks You Can Buy Now, cut expenses further to maintain the dividend, prospects for next year are much more sanguine, 3 Reasons to Inject Your Portfolio with Sorrento Therapeutics, Matt McCall and the InvestorPlace Research Staff, Buy Piedmont Lithium Stock Now for Unique EV Exposure, Louis Navellier and the InvestorPlace Research Staff, Trump vs. Biden: Stocks to Buy No Matter Who Wins the White House, 7 Hot Stocks Offering Triple the Upside Now, Despite Its Huge Run-Up, Hyliion Stock is Still a Long-Term Buy, 7 Elections Stocks You Definitely Want To Avoid Leading up To the Big Vote. So, there’s no need to cut the dividend. Exxon didn’t identify specific regions in which that production wipe out could come, but it’s clear its Imperial Oil unit in Canada is likely to be part of that scenario, should it come to pass. All rights reserved. I don’t think Exxon will survive as a standalone public company for the next five years. It’s Darwinian. Exxon is more than 100 years old, and for the next 100 years Exxon will never again be viewed as a growth company. My work is also featured on Real Money, the premium portal of TheStreet.com. Additionally, the oil demand outlook is troublesome. All rights reserved. Yes, interest rates are low, but Exxon is selling debt to defend its dividend, something a slew of this year’s dividend offenders did in previous years. 1125 N. Charles St, Baltimore, MD 21201. It is interesting to type in “exxon share buyback” into Google. There has been much speculation in the financial media about the future of … On Oct. 29, the company will either maintain the dividend or not. That is exactly what I, and every other Exxon shareholder, wants. Article printed from InvestorPlace Media, https://investorplace.com/2020/10/xom-stock-dividend-yield-could-hit-13-percent/. UNITED STATES - APRIL 9: An Exxon gas station is pictured in Washington on Thursday, April 9, 2020. Aug 6, 2020 08:54AM. All Rights Reserved, This is a BETA experience. The folks in Irving need to realize what the motto of my firm Excelsior Capital Partners preaches: cash flow never lies. Then the company will start to make positive FCF. That might be the end-game here. Patient investors will either wait until Oct. 29 or if the stock hits a 13% yield to buy more shares. Analysts are now very gloomy about the price of oil. They believe that their cost-cutting and capex spending cuts, along with borrowing, will give them enough liquidity to maintain the dividend. That doesn’t mean Exxon will follow suit, but suffice to say, it’s not an encouraging sign for the fate of dividends in the broader energy patch. ... [+] (Photo by Caroline Brehman/CQ-Roll Call, Inc via Getty Images). Article printed from InvestorPlace Media, https://investorplace.com/2020/08/xom-stock-struggles-dividend/. The stock charts would probably tell you this, but oil E&P is just not viewed as a great business by the financial markets anymore. Oil prices remain stuck near the $40/barrel range and Exxon shares have been terrible performers, declining more than 50% this year while the broad-based S&P 500 has retraced all of its Covid-19 losses and actually stands at a 7.9% gain for the year. The market is almost always right when it comes to dividend cuts. It is probably an understatement to say that ExxonMobil is not loved by the “woke,'' ESG-crazy folks who fill the airwaves of the nation’s second most popular financial news network (CNBC) and blather on about sustainability. (Photo by Caroline Brehman/CQ-Roll Call, Inc via Getty Images), EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change. First, reports surfaced on Aug. 6 that the company will cease contributing to employees’ 401(k) plans to conserve cash for the dividend. quotes delayed at least 15 minutes, all others at least 20 minutes. 1125 N. Charles St, Baltimore, MD 21201. Copyright © A member of the Dow Jones Industrial Average, Exxon Mobil stock is lower by 37.16% year-to-date, embodying the energy sector’s status as one of the worst-performing groups in the S&P 500 in 2020. No one wants to invest in a woke oil company. It’s no wonder that some experts argue that oil demand will never again resemble 2019 levels, making Exxon and its ilk too risky for long-term investors. continues to generate cash and continues to return it to shareholders in the form of dividends. Isn’t that just financial engineering? Otherwise, who would believe any of their statements in the future? Somewhat remarkably, Exxon is mostly flat to start August after reporting a second-quarter loss of 70 cents a share on revenue of $32.61 billion. On the date of publication, Mark R. Hake did not have (either directly or indirectly) any positions in any of the securities mentioned in this article. But, as you can see, this was mostly from borrowing more money. Spending cuts and dividend defense are usually applauded by Wall Street, but a growing debt burden could undo much of that good work. The total FCF losses and dividends in the first half added up to $11.5 billion. Woods would be committing career suicide to do so. In a recent regulatory filing, the oil major said that if prices don’t rally some more – it didn’t say by how much – before the end of 2020, it could be forced to write-off 20% of output, or the equivalent of 4.5 billion barrels of crude. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. So, Exxon shareholders should be rewarded for their patience with continued dividend payments—even at a yield of 10%—and share buybacks that, by definition, lower the gross amount of those dividend payments. Corporate incompetence, like the disastrous run of XOM stock during Woods’ tenure as CEO, is always taken care of by the markets. I invest solely for individuals, and for them I try to dispel the darkness that emanates from Wall Street. Remember, even if Exxon can get FCF losses to zero, or raise money from asset sales, it still has to cough up $3.72 billion for the dividend. Second, Exxon’s debt increased to $10 billion in June quarter while the company generated just $1.5 billion in operating cash flow against negative free cash flow of $5.1 billion. They see the pandemic spreading through the coming winter, forcing economic activity lower. I suspect that management will be forced to cut expenses further and keep the dividend steady. Said another way, dividend payers funding the payout with debt are more susceptible to cuts or suspensions down the road than companies delivering shareholder rewards via free cash. A token increase (a penny a share per quarter, for instance) announced before Exxon's earnings release on October 30h would not harm the company's financial situation. Set Up E-mail Alerts For Dividend Cut » Dividend Cut news Oct 7, 2020 12:29PM. Aug 4, 2020 02:18AM. Unless Q3 FCF turns positive or its capex is cut, almost 65% of its cash will be used up in Q3. So, Exxon needs to spend more proportionately on its downstream and chemicals businesses, and let the prodigious cash flows from its E&P businesses serve as fuel to BUY BACK STOCK. To put it bluntly, the market does not believe that the rate will stay at 87 cents quarterly or $3.48 annually. You’ll get the name & ticker of Matt McCall’s top pick when you tune in to his FREE event. Nasdaq Opinions expressed by Forbes Contributors are their own. However, Barron’s reported this week that Exxon may indicate it may have to cut expenses further to maintain the dividend. ExxonMobil XOM continues to generate cash and continues to return it to shareholders in the form of dividends. So now their statements are going to be put to the test. Analysts expected a loss of 61 cents on sales of $38.16 billion. Speaking of oil prices, the recovery hasn’t been sharp enough to prevent Exxon from issuing some gloomy commentary. Nasdaq That’s the true measure of after-tax cash flow. So, assuming the company keeps its dividend steady and assuming oil keeps falling, it is possible the yield could go over 13%. Management is committed to defending the payout, meaning that, barring unforeseen disaster, it probably won’t be cut this year. These are rough days in the oil patch and Exxon Mobil (NYSE:XOM), the largest domestic oil company, proves as much. The Sanskrit root of "Guru" combines "dispel" and "darkness." Seemingly everyone has an Exxon Mobil dividend opinion, mostly negative with the yield now in the double digits. Two more optical issues to consider with the Exxon dividend. Financial Market Data powered by FinancialContent Services, Inc. All rights reserved. Consume enough news about Exxon these days and you’re bound to hear something about the dividend. Something’s gotta give. As investors like Carl Icahn note the attractiveness of large oil companies, I can’t believe no one has taken a pad and paper and created a spreadsheet showing the massive returns that could be had by buying Exxon, taking it private, using even more leverage and saving the dividend payments. Dividend Cut. Aug 11, 2020 04:52PM. Review XOM dividend yield and history, to decide if XOM is the best investment for you. As I pointed out in my last article, management has forcefully denied any plans to cut the dividend. The game has changed. There has been much speculation in the financial media about the future of Exxon’s $0.87 quarterly dividend.
.
Johnson County Election 2020,
Her Majesty's Theatre London Grand Circle View,
Set Phasers To Stun Meaning,
Emilio Pagan Trade Mariners,
Who Is John Nettles Married To,
Deltona Fl Newspaper,
Best Sunscreen For Oily Skin Under Makeup,
Cool Tapestries For College,
Criterion Center,
Accident In Moon Township Today,
Medicare And Medicaid Eligibility,