Exxon Shareholders Suffer a Windfall Loss of 13.7%

Aug.31.08 | About: Exxon Mobil (XOM)

Exxon's (NYSE:XOM) record profits and its possible "windfall profits" have received a lot of media attention recently - do a Google search for "Exxon's record taxes" or "Exxon's windfall profits" and you'll find several hundred thousand results for either. Do a Google News search for "windfall profits tax Senator Obama" and you'll find hundreds of links to news stories where Senator Obama has proposed taxes on Big Oil's "windfall profits."

CEP's Dean Baker explains here what windfall profits are (according to him), and why the government should act to prevent windfall gains.

In all of the discussions about Exxon's windfall, record profits, which are owned ultimately by Exxon's shareholders, nobody ever discusses how Exxon shareholders have been doing lately. So let's ask the question: With oil and gas prices at record recent highs (rising 50% this year), with Exxon profits at record highs, how is the average Exxon shareholder faring?

Well, not too well really. If you had bought one share of Exxon at the begining of the year, you would have paid $94, and you would have received a $0.35 dividend in Febuary, and $0.40 dividends in May and August, for a total of $1.15 in dividends this year. Exxon is now selling for $80 (see chart above), so your annual return this year from holding Exxon stock would be -13.7%, and a $1,000 investment in Exxon on January 1 would now be worth only $863. Seems like more of a windfall loss than a windfall gain for Exxon shareholders.