SPECIAL REPORT The Top 7 Stocks for 2024

Here’s Why Exxon Mobil Is The Energy Stock to Own NOW

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  • Consider Exxon Mobil (XOM) stock’s recent decline as your cue to invest and retain your position.
  • Currently, the company provides a 3.6% forward yield.
  • Value  and income-oriented investors should seriously contemplate owning Exxon Mobil shares.
XOM stock - Here’s Why Exxon Mobil Is The Energy Stock to Own NOW

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Exxon Mobil (NYSE:XOM) is among the dividend-paying energy stocks I think investors should focus on now. The company’s long history of dividend payments, rising distributions, and active share buybacks make XOM stock one of the top mega-cap stocks I think is overlooked.

In late 2022, Exxon increased its buyback program from $30 billion to $50 billion, extending it through 2024. Additionally, Exxon made headlines with its $59.5 billion all-stock acquisition of Pioneer Natural Resources (NYSE:PXD), a deal I think will tremendously benefit its shareholders.

Here’s more on why I think XOM is one energy stock you should have in your portfolio.

XOM Has Great Financials

Exxon Mobil’s robust balance sheet is among its most investment-worthy traits. The company’s relatively low debt-to-equity ratio and substantial cash reserves position Exxon well to handle periods of volatility.

The company’s cash reserves rose by $3.3 billion in the last quarter, totaling $32.97 billion. Exxon Mobil is actively pursuing acquisitions and recently completed its purchase of Denbury on November 2, further enhancing its low-carbon solutions segment.

Additionally, Exxon Mobil is often considered a safe energy stock despite inherent risks in the market. Geopolitical instability and prolonged oil production cuts have heightened the importance of energy resilience. Concerns over the competition between renewable energy and hydrocarbons may be alleviated by focusing on diversification to address population growth. Accordingly, Exxon’s strong financial performance, with consistent profitability except for a 2020 dip, reinforces its position as a stable energy stock.

Excellent for Passive Income Investors

Exxon Mobil returned a substantial $8.1 billion to shareholders in Q3 and increased its Q4 2023 dividend to 95 cents per share, emphasizing its commitment to rewarding investors. CEO Darren Woods highlighted, “We view the dividend as a commitment,” which should resonate with passive income investors.

Exxon Mobil reached its goal of $9 billion in cost reductions in Q3, supporting its ability to sustain quarterly dividend payments. The company’s commitment to shareholders includes cost-cutting, increased dividends, and strengthening its industry leadership by acquiring Pioneer Natural Resources.

Recent News and Updates

Recently, Exxon Mobil appointed Dina Powell McCormick to its board. Her position starts effectively on January 1, 2023. Ms. Powell McCormick, with extensive experience in finance and international affairs, previously served two U.S. presidents and led Goldman Sachs’ sustainability initiatives. ExxonMobil anticipates her valuable contribution as they navigate an evolving global landscape.

Moreover, Exxon Mobil has completed its acquisition of Denbury Inc. in an all-stock deal worth $4.9 billion. Denbury shareholders received 0.84 ExxonMobil shares for each Denbury share. CEO Darren Woods stated that this strengthens their low-carbon solutions business and enhances their position in industrial decarbonization.

ExxonMobil’s acquisition has expanded its CO2 pipeline network, adding over 1,300 miles, with about 925 miles in key CO2 emission regions. They now possess 15 onshore CO2 storage sites and Gulf Coast and Rocky Mountain oil and gas operations that generate cash flow and carbon capture opportunities. Ultimately, these assets could reduce emissions by over 100 million metric tons annually.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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