After a 3.9% Raise, Here's How Many Shares of ExxonMobil You'd Now Need for $1,000 a Month in Dividends
Key Points
ExxonMobil recently raised its quarterly dividend by 3.9%, from $1.03 to $1.07 per share, marking its 44th consecutive annual dividend increase.
The integrated oil and gas company's management has long prioritized continued dividend growth and even raised its dividend during the COVID-19 pandemic.
Between success in its exploration strategy and cost-reduction efforts, shares appear well positioned to benefit from further increases in payouts.
On Oct. 30, ExxonMobil (NYSE: XOM) raised its quarterly dividend by 3.9%, from $1.03 to $1.07 per share. Having raised its dividend for 44 consecutive years, it's just six years away from reaching Dividend King status.
Moreover, after pulling back in recent weeks, the opportunity to buy stock at a lower entry point has opened up for long-term, dividend-focused investors.
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How many ExxonMobil shares generate $1,000 a month in dividends?
ExxonMobil's new quarterly dividend rate of $1.07 per share amounts to $4.28 per share annually. Since $1,000 per month is $12,000 per year, dividing $12,000 by $4.28 gives the number of shares required to generate $1,000 in monthly dividend income: 2,804 shares.
With ExxonMobil recently trading for around $166 per share, you would need to invest around $465,464. Doing so would generate $12,001.12 in annual dividend income, meeting our $1,000 monthly goal. This works out to a forward dividend yield of just under 2.6%. Alongside a yield in line with other high-quality dividend stocks, ExxonMobil's long-term dividend growth prospects remain solid.
A question of "how much," not "if"
ExxonMobil's management makes dividend growth a high priority. Even during 2021, when the company was contending with low energy prices due to the COVID-19 pandemic, it still raised its quarterly payout, albeit by just a penny. Given this high level of commitment, when it comes to dividend growth, it's more of a question of "how much" rather than "if."
Better yet, consider the days of bare-bones dividend growth a distant memory. In more recent years, dividend growth has averaged around 4% annually. Based on analyst forecasts calling for $13.66 in earnings per share this year, the stock has a payout ratio of just 31.3%. Success with its exploration and cost-reduction efforts, not just high oil prices, has played a role in this. Even as energy price volatility could worsen for the company once again, until further signs emerge, don't skip including ExxonMobil in a portfolio of other high-quality dividend stocks.
Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.