ExxonMobil NYSE: XOM at https://www.webull.com/quote/nyse-xom , the titanium of crude, remains one of the few oil majors who this year has failed to slash their dividend. But the achievement comes more from Exxon’s stubbornness than from Exxon’s superior results. The first and second quarter losses correlated with Exxon’s COVID-19 have become its first quarterly loss in decades. With crude oil prices currently below $40 per barrel in West Texas Intermediate (WTI), the Exxon dividend – which yields more than 8% – can be tough.
Drop Out Of Grace
In recent months, Exxon has had a difficult time with it. The firm was once known as a Dow Jones Industrial Average (DJIA) blue chip sweetheart, but was excluded from Dow about 100 years later. The tech firm Salesforce.com replaced Exxon in late August when the index was adapted to more accurately mirror the contemporary economy.Exxon shares have fallen by 45% by now, and the market as a whole and the entire oil industry are still underperforming.
Not Much Cash
Although the removal of Exxon from DJIA could shake the company’s dignity, the lack of cash to cover its dividend is even more pressing. The expenses and dividend bond of Exxon are now the most important oil big corporations as Royal Dutch shell reduces its dividend.
Before the pandemic, Exxon NYSE: XOM expected an estimated annual capital spending of between 30 billion dollars and 35 billion dollars in 2010, and 33 billion dollars in 2020. Since then, expected investments have fallen to $23 billion in 2020, which will come in in the first half of this year, after the $12.47 billion in exploration and capital. Exxon paid $7.43 billion in dividends, but just $6.27 billion in cash flow in the first half of this year from profits.
The Awful Truth
As much as Exxon NYSE: XOM Mobil needs to retain its dividend it is true that the firm is pressurised either to take on more debt or to reduce their dividends by lower oil prices and refining margin. Both effects are disadvantageous.
The scale and effect of the refining sector of Exxon is frequently underestimated. Smaller demand for transport fuel such as petrol, gasoline, and jet fuel has lowered Exxon’s refining margins to 50 percent less than 10 years away, lowering Exxon’s second-quarter profits by $600 million. This effect has been almost adequate to cover Exxon’s 800 million dollars in savings. This indicates that Exxon can only reduce its risks where a substantial part of its operations are focused on factors beyond its influence. You can check more stocks like nyse ccac u at https://www.webull.com/income-statement/nyse-ccac-u before investing.
Disclaimer: The analysis information is for reference only and does not constitute an investment recommendation.