XOM stock is a great option for investors on the prowl for high yield
Sideways oil prices may limit its ability to gain in the
near term. But if you’re thinking of buying Exxon Mobil (NYSE:XOM) stock for
its high yield, there’s little reason to worry.
With 2020’s troubles behind it, the integrated oil and gas
giant is no longer at risk of cutting its dividend. Expected earnings for this
year ($4.28 per share) will more than cover its payout.
Sure, investors still have reasons to price in a risk
premium. This can be seen in its forward yield of 6.3%, which is above its
average dividend yield of around 5.6% over the past four years.
First, there’s the uncertainty over whether oil prices will
remain high. Lower oil prices could renew fears of a dividend cut. Second,
there are issues related to a socially-conscious activist who recently won
several seats on Exxon’s board. Yet, looking at the details, both these
concerns appear overblown.
Its rate of payout is safe, and XOM stock is again a great
dividend play.
It may take another rally in energy prices to send the stock
soaring again. However, if you’re more interested in yield than in potential
gains, you may want to snap it up at today’s prices (around $55 per share).
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