Is Exxon Mobil's 8% Dividend Yield Safe?

Exxon Mobil Corporation (NYSE:XOM) doesn't want to cut its dividend, but for investors, it's a question of whether the oil and gas giant will end up having to do so sooner or later.

The company released its second quarter results on July 31 and sales of $32.6 billion were less than half of the $69.1 billion that Exxon reported in the prior-year period. It also incurred a net loss of $1.1 billion. That's down from a profit of $3.1 billion the same period last year. The company blames an oversupply of oil and the COVID-19 pandemic for its weak bottom line.

And with the outlook not looking a whole lot better from here one out, the dividend could be in trouble.

On Exxon's earnings call, Senior Vice President Neil Chapman stated that the company will take "short-term postponements in capital investments" in order to keep the dividend safe. However, he did concede that there were "too many unknowns" and that the company feels it can maintain both its current debt level and dividend "certainly for the coming year or months."

Although the company's optimistic it can sustain the dividend for now, Chapman certainly isn't sounding overly committed for the long haul. While the dividend is very important for shareholders, the business has to come first and if things don't improve – and there's little reason to expect that they will given the COVID-19 pandemic isn't going anywhere – it's likely that Exxon will make a change to its dividend at some point over the next 12 months.

Investors looking for a dividend stock to put into their portfolios are better off looking elsewhere.