Once one of the most valuable companies in the world, Exxon Mobil (NYSE:XOM) has seen its luster dim in the wake of ESG-focused investing mandates and widespread capital outflows out of fossil fuel-related investments.
This reality has resulted in Exxon’s dividend yield increasing to the 8% range, of late. This is due mainly to the serious aforementioned stock price hit the company has taken. In this context, investors may wonder if the downside stock price risk of owning Exxon is worth the reward provided by a very lucrative dividend yield.
In my mind, Exxon’s core asset base remains very broad. The company’s diversification within its sector is excellent. Exxon still continues to pump out high levels of cash flow. With oil prices starting to stabilize, one might consider buying this stock as a short term value trade with the hope of earning some nice capital appreciation in a short amount of time as the stock is repriced.
That said, this sector is generally one with far too many headwinds for investors, such as myself, who have long term investment time horizons and relatively conservative risk profiles. This is particularly true if one believes money will continue to move out of oil & gas and into renewable energy and the like, as I do.
The company’s dividend is indeed extremely attractive. However, there are a number of other high quality dividend options in the high single digits for investors to consider that are in better sectors.
Invest wisely, my friends.
