Can You Really Trust Exxon Mobil Corporation’s 8.1% Dividend?
The COVID-19 pandemic has hammered many businesses. But some
businesses have suffered worse than others.
Case in point: Exxon Mobil Corporation (NYSE:XOM).
Commodity prices plunged after government lockdowns ground economic activity to
a halt. As a result, the energy giant just posted some of the worst financial
results in its history.
The company’s drilling business? Profit warning. Exxon’s
refining operations? Struggling. The chemicals division? In disarray.
So it’s no surprise to see some analysts questioning the
sustainably of Exxon’s dividend. And with a yield approaching 8.1%, it’s clear
that some investors on Wall Street don’t trust the payout. Let’s dive into the
numbers.
At first glance, you might assume that Exxon Mobil
Corporation’s dividend is toast.
The company reported a second-quarter earnings loss of $1.1
billion, the biggest earnings deficit in the firm’s history. The second-quarter
release also presented Exxon’s first consecutive quarterly loss in more
than 30 years. (Source: “ExxonMobil Reports Results for Second Quarter 2020,” Exxon
Mobil Corporation, July 31, 2020.)
Even a rookie financial analyst can see the problem here.
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