Exxon Mobil Corp (NYSE:XOM): A Reliable Dividend Stock with Strong Financial Health

Dividend investors often look for a mix of yield, sustainability, and financial stability. One way to find such stocks is by using a dividend-focused screener that selects companies with strong dividend ratings while keeping solid profitability and financial health. EXXON MOBIL CORP (NYSE:XOM) stands out as a potential pick from this method, fitting criteria that focus on dependable payouts without weakening the company’s core strength.

Key Dividend Metrics

Exxon Mobil’s appeal to dividend investors comes from several factors detailed in its fundamental analysis report:

• Dividend Yield: At 3.54%, XOM’s yield is higher than the S&P 500 average of 2.36%, providing a good income stream. While not the top in its sector (which averages 6.28%), it balances yield and safety.
• Dividend Growth: The company has raised its dividend at an annual rate of 3.02% over the past 10 years. Though not high, this growth shows consistency, a key trait for long-term dividend investors.
• Payout Ratio: At 55.57% of earnings, the payout is manageable. While on the higher side, it allows for reinvestment and avoids the risks linked to very high ratios (e.g., above 80%).
• Track Record: Exxon Mobil has paid dividends for over 10 years without cuts, proving reliability even in unstable energy markets.

Profitability and Financial Health

A lasting dividend needs a company to produce steady profits and maintain a strong balance sheet. Exxon Mobil’s fundamentals back this:

• Profitability: With a ChartMill Profitability Rating of 6/10, Exxon Mobil shows decent margins. Its return on equity (11.81%) and return on invested capital (7.61%) beat many peers, showing efficient capital use. Operating margins have also grown in recent years.
• Financial Health: The company’s Health Rating of 6/10 points to a stable balance sheet. Key strengths include a low debt-to-equity ratio (0.13) and a strong Altman-Z score (4.06), suggesting low bankruptcy risk. Liquidity metrics, like the current ratio (1.25), are sufficient, though the quick ratio (0.88) indicates some reliance on inventory to cover short-term needs.

Valuation and Growth Considerations

Exxon Mobil trades at a P/E ratio of 15.23, slightly below the industry average (18.64) and well under the S&P 500’s 26.84. This fair valuation lowers downside risk. However, growth outlooks are mixed: while EPS is expected to grow at 11.51% yearly, revenue is forecast to drop (-6.52%), reflecting wider sector challenges.

Why These Criteria Matter

The screening approach highlights:

• Dividend Sustainability: A moderate payout ratio and steady growth history lower the chance of cuts.
• Profitability: Ensures the company can support dividends without hurting operations.
• Financial Health: A solid balance sheet protects dividends during tough times.

Exxon Mobil meets these standards, making it a choice for investors looking for steady income with controlled risk.

For more dividend stock ideas, check the full Best Dividend Stocks screen.

Disclaimer: This article is not investment advice. Always do your own research or talk to a financial advisor before making investment decisions.