Exxon Mobil (XOM) has been a powerhouse stock in 2022, rising 81% year to date. Providing a kicker to capital gains is the hefty yield, asserts Chuck Carlson, dividend reinvestment specialist and editor of DRIP Investor.
Now, there was a period when the company’s dividend didn’t look so safe. Well, those fears turned out to be unfounded. Indeed, Exxon has not only maintained the dividend but recently announced a small increase in the payout.
The firm is upping its dividend 3% to a quarterly rate of $0.91 per share from $0.88, payable December 9. The dividend yield based on the new payout is 3.3%.
Exxon is in the position to boost its dividend given its impressive results in the third quarter. Indeed, the energy giant posted net income of $19.7 billion in the quarter. With oil prices expected to remain at elevated levels, Exxon’s earnings and cash flow should continue to be solid.
The impressive move in Exxon Mobil stock to new all-time highs begs the question — is there more left in the tank? I think the answer is yes, though I don’t see the stock posting another 81% advance over the next 12 months. However, the yield of more than 3% coupled with reasonable albeit more moderate price gains should result in a double-digit total return for investors in 2023.
I am a long-time owner of Exxon — I bought my first shares in the early 1990s — and while I have had to sit through some down periods, I never stopped reinvesting dividends and making occasional stock purchases. The stock’s recent strength has rewarded me for that persistence. I continue to view the stock as a core holding for investors who want energy exposure.
Please note Exxon has an extremely friendly direct-purchase plan. Minimum initial investment is $250, though the firm will waive the minimum if an investor agrees to automatic monthly investment via electronic debit of a bank account of at least $50.
There is no enrollment fee, and Exxon does not charge any fees to buy shares through the plan. Full and partial dividend reinvestment is available. The plan has traditional and Roth IRA options built into the plan for investors who want to make retirement investments directly. The plan administrator is Computershare.
