Exxon Mobil (XOM) Just Gave My Family a 2.7% Raise
It was only a few days ago when I discussed how Johnson & Johnson (JNJ) gave my family a 5% raise. We have owned shares of stock in the company for over the past 7 years and have received over $200 in dividends from the company.
Every year that goes by, the raises given by (JNJ) and many others that we own grow larger and larger. And every time we get a dividend payment from one of these companies … we buy more shares of stock with it!
Investing in quality dividend paying companies for the long-term like JNJ and others is one of the best investment decisions you will ever make. The stock price of these companies may go up or down with the market … but the dividend continues to grow (usually) every single year.
That is what I love about investing in top notch companies like this. You do your homework and invest your hard earned income and sit back and collect dividends. Easy money!
The most recent dividend increase (or raise) from a stock we own was from Exxon Mobil (XOM).
XOM Shareholders Get a 2.7% Raise
Exxon Mobil (XOM) recently announced an annual dividend increase. The company has been consistently raising annual dividends for over 35+ years … which is so awesome!
Company shareholders will now receive $0.77 in quarterly dividends for each share they own … instead of $0.75 paid last quarter. This increase comes in well below our desired dividend growth rate of at least 6%.
The latest increase bumps the annual dividend for XOM up to $3.08 per share compared to $3.00 last year.
Overall, that is a 2.67% increase in dividend income.
How Much Extra Income?
We currently own 36.175 shares of XOM in our Money Sprout Index.
This latest dividend increase has pushed our 12 month forward dividend income for XOM up to $111.42, compared to $108.52 last quarter.
That is an annual dividend income increase of $2.89 – not huge but every little bit of growth counts.
This increase is simply a reminder that our dividend portfolio is constantly growing every single day … without any extra work from us..
Dividend Growth for XOM
We have owned shares of Exxon Mobil for 3.5 years … which puts it in the mid-range when it comes to the length of time we have owned certain stocks.
Overall, the company has shown the ability to grow their dividend for over 35+ consecutive years. The company’s dividend growth has slowed down just a little in recent years.
Take a look at the annual dividend payments since 2012 –
- 2012 – $2.18
- 2013 – $2.46
- 2014 – $2.70
- 2015 – $2.88
- 2016 – $2.98
- 2017 – $3.06 (projected)
Note – The 2017 dividend has been adjusted to reflect a dividend increase after the first quarter.
As you can tell from the numbers above, XOM dividends have been raised consistently over the past several years.
Typically, we look for stocks with a 5-year or 10-year dividend growth rate (DGR) of 6% or higher.
Exxon Mobil has fallen well short of maintaining a dividend growth rate above the 6% (or higher) over the past 3 years. However, the 5 year DGR is still slightly above the 6% threshold that we look for in a stock for an extended period of time.
Here are a few average growth rates for shares of Exxon Mobil –
- 1 Year DGR – 2.68% (2016 to 2017)
- 3 Year DGR – 4.27% (2014 to 2017)
- 5 Year DGR – 6.67% (2012 to 2017)
As you can see from the dividend growth averages above … they have been declining recently for the company.
Because we have been holding our shares for 3.5+ years now, we are earning a yield on cost of 3.48%. That is a healthy yield that will continue to grow … provided the company continues to offer annual increases.
Exxon Mobil – Buy, Sell, or Hold?
Back in November 2013, we purchased a 1/2 share of Exxon Mobil for $95.49 per share. We had setup an automated $50 investment each month into XOM through the company’s direct stock purchase plan (DSPP). This plan is administered through ComputerShare.
We continued to buy partial shares in the company each month through this plan for a year and a half, eventually bumping our investments up to $250.
Over the 18 month period, we bought more than 33+ shares through the Exxon Mobil DSPP.
At the time of this writing, XOM is one of our largest holdings in the Money Sprout Index. It currently makes up 4.4% of our overall portfolio.
Since our first purchase in the company, we have earned $258.95 in dividends from XOM!
Here are a few stats from owning stock in Exxon Mobil for the past 3.5 years-
- Total Investment – $3,200.00
- Shares Purchased – 33.115
- Dividends Earned – $258.95
- DRiP Shares – 3.060
To date, we have earned back 8.1% of our original investment … just in dividends! That just goes to show you the power of holding on to quality dividend paying companies.
At the time of this writing, XOM does not meet our stock screen criteria based on the following metrics –
- Current Yield – 3.77%
- Payout Ratio – 163.83%
- P/E Ratio – 43.43
The company meets the current yield requirement of being greater than (or equal) to 2% coming in at 3.77%.
However, as you can see … the payout ratio is incredibly high (over 100%)! We typically only buy stocks when they have a payout ratio that is less than 60%.
The company also falls short on P/E coming in well above the 20 that we look for. Exxon Mobil has a price to earnings ratio that is over double what we screen for in a dividend stock.
Based on our current allocation of XOM and the poor metrics, we have it as a solid HOLD for our portfolio. Provided the company continues to maintain or raise it’s dividend, we will continue to hold our shares. However, if at any point they cut or lower their dividend … then we will sell our shares.
Just like Johnson & Johnson, Exxon Mobil has been a solid foundation for growing and building our dividend income portfolio. However, we just feel there are better dividend income opportunities at this time to invest new money.
Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – XOM. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.