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Income investors desire dividends that are backed by strong management teams and a tendency for dividend growth. In this article, I will highlight a few natural resources stocks, specifically oil companies whom offer strong dividend yields. Exxon Mobil (XOM) owned, until upstart Apple (AAPL) became the tablet industry leader, the largest NYSE market capitalization. Exxon and Mobil merged at the end of the 1990s; Exxon Mobil Corporation represents the biggest publicly traded integrated oil player.

Fair Value

If examining the fair market value for Exxon, one has to consider a number of factors. These can include the price to earnings (P/E) multiple and growth prospects. Exxon is trading at 10 times its 2011 earnings per share of an estimated $8.50 per share.

Evaluate the Dividend

Exxon pays an annual dividend of 2.2%. Just in comparison to a bank savings or 30-year Treasury bond, the company's dividend return offer is far better. While not a stellar payout, the quarterly dividends have consistently grown over the last ten years, paying 23 cents per share in May 2002 to 47 cents per share as of November 2011. Exxon went ex-dividend on February 8, 2012, for the 4th quarter of 2011.

1995 - 2011 Dividend History

What's more critical, however, is how the current dividend level relates to the company's value. Exxon gets big marks in the availability of company cash to release to shareholders as well as keeping a lid on debt compared to total capital. On the cash side, as mentioned earlier, Exxon has consistently paid its dividend for a decade.

Oil Peer Group

SandRidge Mississippian Trust I (SDT)
SandRidge is a U.S. Royalty Trust that pays a high distribution on a quarterly basis. The parent, SandRidge, has hedged oil production in the early years to ensure high distribution yields.

British Petroleum (BP)
British Petroleum has survived the Gulf of Mexico accident and is proceeding ahead as a global energy leader. Per the above table, the company has provided a lower total annualized rate of return due to the unfortunate accident that could occur to any oil company.

Chevron (CVX)
Chevron operates two primary units, upstream and downstream. The upstream segment includes exploration, development, and production of crude oil and natural gas.The downstream unit is involved in the refining of crude oil into petroleum products, and the marketing of crude oil and refined products.

ConocoPhillips (COP)
ConocoPhillips is engaged in the upstream and downstream markets. The company is spinning off its downstream unit by the end of June 2012. The goal is to establish Conoco as a pure play energy and production company. Phillips 66, the spin off company, will retain the chemical joint venture with Chevron and midstream joint ventures.

Company Background

Exxon has remained a stock market blue blood of the Fortune 500 for decades. Competing with such other oil giants as Chevron and ConocoPhillips, Exxon has remained a steady ship as a conservative investment choice. The company continues to invest heavily in pursuits of new oil resources to bolster its reserves as well retain market share. Additionally, Exxon is a major player in both American and world oil politics, with subsidiaries and affiliates spanning the globe. Finally, unlike British Petroleum in the 2011 Mexican Gulf rig disaster, Exxon has kept itself out of trouble since 1989 and the Bligh Reef Alaskan oil spill of the Exxon Valdez.

Moving forward, Exxon continues to bolster its full integration approach, combining oil exploration, refining, and retailing in one organization. Doing so, Exxon has repeatedly produced large profits for its owners and shareholders, even when the general economy has been in the doldrums. Future oil prospects are requiring more advanced exploration and recovery, which is right up Exxon's alley when it comes to deep water or unconventional oil mining methods. For example, like Chevron, the company is a major player on the Alaskan Northern Slope in terms of oil drilling alone.

Exxon is Blue Chip Buy

Nobody should be fooled that Exxon is not currently trading at a bargain. Given the current oil market and the coming warm season, consumer gas prices have the potential to climb over $4 per gallon by Memorial Day on average. This means places like California, for example, could see actual prices reach $4.50 per gallon or even $5. Oil is a necessary product for North America citizens.

Given that much of the refining for the summer supply is already done, much of the gas price cost increase could end up in Exxon's bank account for its sales. Again, consumers will pay, people will be shocked at the end of the year at the company's profit reports, and the dividend will consistently pay out on time. This makes Exxon a reliable, conservative investment for long term creep gain over time. It's not going to fly high like a tech company, but the oil company won't lose an investor's shirt either. That's a lot of promise given it was just about three years ago that the stock market saw its total capital cut in half with the real estate crash.

Action

For conservative investors, investing in Exxon Mobil offers a stable and growing dividend. The company has focused upon purchasing back shares, in addition, along with increasing its dividend. The company has decreased its outstanding shares from 6,930 million shares in 2000, to 4,979 million at the end of 2010. As oil is above $100 per barrel, Exxon Mobil is a blue chip dividend stock worth holding in a diversified portfolio.

Source: Exxon Mobil: A Dividend Growth Buy For 2012