Many oil and gas companies have been slashing expenses along with their dividend payments this year as they struggle amid the coronavirus pandemic. But one company that has refused to stop paying dividends is Exxon Mobil Corporation (NYSE:XOM). And with its dividend yield now at 8.3%, it's one of
the higher payouts that investors can get right now.
However, a dividend is of little use if investors can't expect that the payouts will continue, and that's the big question mark surrounding Exxon today. Although the company notes that it's been seeing an improvement and demand is getting stronger, its sales for the third quarter totaled $46.2 billion and were down 29% from the prior-year period.
Through the first nine months of the year, it has incurred a net loss of $2.4 billion compared with a profit of $8.7 billion during the same period last year.
Another area of concern is that it hasn't been generating enough cash flow to cover its dividend payments. Year to date, its cash from operating activities of $10.7 billion is below the $11.2 billion it has paid out to shareholders, and that's without factoring in its plant, property and equipment purchases totaling $13.7 billion.
But with aggressive cost-cutting measures in place, CEO Darren W. Woods remains optimistic, stating that "We remain confident in our long-term strategy and the fundamentals of our business, and are taking the necessary actions to preserve value while protecting the balance sheet and dividend."
Although Exxon remains committed to keeping its dividend payments intact, investors may be better off looking at other dividend stocks. If the economy doesn't recover quickly enough and Exxon continues to struggle, it may have no choice but to make a change to its dividend.
