ExxonMobil (NYSE:XOM) is a leader in paying dividends. The oil giant paid no less than $14.9 billion in dividends in 2023. That was the third highest total in the world. It will likely pay even more dividends in 2024.
Zooming in on Exxon’s huge dividend
On the one hand, ExxonMobils total dividend payout in 2023 was approximately equal to 2022 levels. However, the payout per share increased. Exxon increased its dividend per share by 3.4% at the end of 2022 and achieved a dividend increase of 4.4% at the end of 2023. That was the 41st consecutive year in which the dividend was increased, a high point during the oil crisis.
The factor that made the connection was Exxon’s meaningful factor share buybacks program. The oil giant bought back $17.4 billion worth of shares in 2023. That helped reduce the debt outstanding shares by 3.6%, even though it issued $4.9 billion in shares to acquire Denbury Resources.
Exxon is on track to pay $15.2 billion in dividends in 2024 based on its current payout rate and shares outstanding at the end of 2023. However, the oil company’s number of shares outstanding will likely increase this year. The catalyst is the upcoming $59.5 billion all-stock acquisition Natural resources pioneer. Existing Pioneer shareholders will receive 2.3234 Exxon shares for each share they own. The oil giant will have to pay out the current dividend rate on these new shares when the deal closes, which is expected to happen in the first half of this year. While the company plans to offset some of that dilution by ramping up share buybacks to $20 billion annually this year, it will likely pay out more than $15 billion in dividends by 2024.
Does Exxon’s large dividend make it a buy?
Exxon is one of the more attractive oil stocks because it pays a high-yield dividend (currently 3.2%) that it routinely raises per share. That steady growth should continue, fueled by high-return capital projects and breakthrough acquisitions like Pioneer. So if you like dividends, Exxon is one of the best.
Should You Invest $1,000 in ExxonMobil Now?
Consider the following before buying shares in ExxonMobil:
The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and ExxonMobil wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. The Stock Advisor service has more than tripled the return of the S&P 500 since 2002*.
View the 10 stocks
*Stock Advisor returns April 15, 2024
Matt DiLallo has no position in any of the stocks mentioned. The Motley Fool recommends Pioneer Natural Resources. The Motley Fool has a disclosure policy.
How much will ExxonMobil pay out in dividends this year? was originally published by The Motley Fool
