Speculation that one of the best dividend stocks to have owned in recent decades from a historical perspective, Exxon Mobil (NYSE:XOM), may be looking at potentially cutting its dividend has further hampered this stock of late.
Exxon has been one of the worst performing stocks that was listed on the Dow Jones Industrial Average, and has now been delisted. Stripped of its former glory, some value and high-yield investors have looked at this stock as a potential bargain bin pickup. I, however, do take great caution with stocks like these that could actually represent value traps at these levels.
The company is currently struggling to pay its dividend obligations, which now total around $15 billion U.S. per year. The company has also been forced to take substantial write-downs on its existing asset portfolio, due in part to lower oil prices and the prospective for reduced long-term cash flow generation from these assets. Earnings and bottom-line performance could therefore be depressed for some time, leading to issues with dividend payouts if this current environment remains status quo.
One interesting note that has spurred speculation that Exxon may not raise its dividend as it has previously done for decades is due to comments made in this company’s most recent conference call, removing the word “growing” when discussing Exxon’s dividend program. Whether or not this materializes remains to be seen, however investors ought to consider the potential for a dividend cut or hold for this stock on the horizon.
Invest wisely, my friends.
