Exxon Mobil (XOM) has admittedly had a soft 2013 thus far, but bigger-picture, this energy giant is as solid a stock as they come.
Just consider the size and scale of Exxon. It has a market capitalization of over $383 billion, annual operating cash flow that tops $56 billion and more than $40 billion in cash and long-term investments. Quite a firm foundation!
As for dividends, XOM’s payout is a respectable 2.8% but a paltry 33% of fiscal 2013 earnings. That means the dividends are easily sustainable even if times get tougher, and that payout can comfortably move higher. Consider that Exxon has boosted its dividend payouts 150% in the past 10 years, from 25 cents a quarter in 2003 to 63 cents currently.
Admittedly, the energy biz is very cyclical and it’s unlikely to see big share appreciation in XOM without a firm global recovery. However, long-term dividend investors might want to stake out a position in this energy megacap both for the current dividend and the hopes of much higher dividends in the years ahead.