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Exxon Mobil Vs. Chevron: Big Oil Stock Showdown

Apr. 02, 2018 7:27 PM ETChevron Corporation (CVX), XOM58 Comments
Sure Dividend profile picture
Sure Dividend


  • Exxon Mobil has dramatically underperformed Chevron, mostly due to its inability to grow its production for a whole decade.
  • However, Exxon Mobil recently announced a major shift in its strategy. The company will greatly boost its capital expenses from now on in order to grow its output.
  • Given the upcoming dividend hike, Exxon Mobil is offering a 4.3% dividend yield, which is the highest yield it has offered in the last two decades.

By Aristofanis Papadatos

Exxon Mobil (NYSE:XOM) has remarkably underperformed Chevron (NYSE:CVX) during the last two years. To be sure, it has lost 13% whereas Chevron has rallied 23%. It is really rare to see such a great divergence between these two oil majors. Therefore, the big question is whether the pain will continue for Exxon Mobil or the time has come for a reversion to the mean.

Exxon Mobil and Chevron are both high-yield Dividend Aristocrats, meaning they have increased their dividends for 25+ consecutive years. You can see all 53 Dividend Aristocrats here.

This article will compare these two Big Oil dividend growth stocks.

Business Overview

All the oil majors were severely hit by the downturn of the oil market, which began almost four years ago. Before the downturn, all the oil majors were generating about 90% of their earnings from their upstream segments; i.e., the production of oil and gas. However, as the price of oil began to collapse, this segment was severely hit due to its leverage to the price of oil.

On the other hand, while the price of oil was falling, the price of oil products fell more slowly thanks to the resultant improvement in their demand. As a result, the refining margins greatly improved and hence the downstream segments of the oil majors partly offset the bleeding of their upstream segments. Nevertheless, the impressive performance of the downstream segments of the oil majors was not sufficient to save their overall earnings from plunging.

Exxon Mobil exhibited the most resilient performance among the oil giants. More precisely, its earnings per share [EPS] in 2016 and 2017 were 74% and 37% lower, respectively, than those in 2014. The bleeding was much more dramatic for Chevron, as it posted losses of $0.27 per share in 2016

This article was written by

Sure Dividend profile picture
Sure Dividend helps individual investors find high quality dividend growth stocks with strong competitive advantages suitable for long-term holding. The authors who write for Sure Dividend on Seeking Alpha are as follows:Bob CiuraBen ReynoldsJosh Arnold

Analyst’s Disclosure: I am/we are long XOM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (58)

To many investors, there is a dichotomy of investment philosophies under the same roof. Chevron and Exxon being a case in point.
I've owned both companies, XOM and CVX, for decades. I see these two integrated Oil giants as two different companies focused on different objectives (other than enhancing shareholder value via dividends and share buybacks). Don't own either if you're a growth investor that is luke warm on income streams.

If the cash flow leaving the company isn't an investor's means of paying normal bills; the 90 day dividend payment affords the investor the income stream to focus on other companies that have fallen on hard times b/c "Mr. Market" is depressed at the moment. Over time, this strategy has produced winning results for me so I have no justified basis to discontinue the strategy.

An example of compounding the XOM/CVX income stream is through the purchase of Puts on a dog**** company like TSLA. That strategy is working overtime increasing the internal rate of return in my portfolio.

Same applied to AAPL two months ago when those shares were just North of $150 or IBM when those shares dropped into the low $140's.

XOM, according to some on SA, 'hasn't grown in a decade and therefore nobody should by buying XOM." Many ways to skin a cat so I keep using XOM/CVX et. al. consistent (growing) income stream to enhance the portfolio.

Good luck to those investors that love to hate Oil, especially XOM and CVX.
I will not buy XOM. If you want to have oil exposure but not the risk, buy VNOM. Go check out yourself. VNOM owns oil lease royalty. It gets 25% of oil revenue without paying a single dime to drill a new well. That is why it is the safe bet. Dividend 7% or so.
jstratt profile picture
I own both CVX and XOM. However I have been buying XOM at recent 52 week low levels.

I think that XOM has been correct in buying back shares during this crash period rather than pursuing growth at all costs. Now it is time to avidly pursue growth and I endorse the actions of XOM.
Other Side Of Trade profile picture
Not to second guess XOM management (I was a seller of XTO, not the buyer--I'm just a lucky guy), but huge increases in CAPEX scare me. It's a whole lot easier to drill for oil on Wall Street right now than in deep water (where costs are sure to escalate from here), and even easier to continue their share buyback and dividend increases.
Phenom1 profile picture
You'd be right if it was largely deepwater spending that was planned, but most is in downstream/chemicals, as well as non-conventional upstream.
Phenom1 profile picture
As those who follow my comments know, I trust the growing income from XOM, backed by its balance sheet and diverse businesses. If I wish to take advantage of an upturn in this cyclical business, I have a lot of ways to do that without touching my XOM shares. In that case, my first choice would certainly not be CVX.
If you are an investor, buy XOM. If you are a trader, stay away. Owned XOM for 50+ years, my return is 30+%. It is the dividend, stupid! Is now and always as been.
Cuip99 profile picture
I am not a trader, I am an investor. So per cent yield is much more important to me than alleged growth. XOM is the monster of big oil, Chevron is pretty far down the pole. I am long in XOM and BP. I do not own any Chevron. I do not think I will own any Chevron. I have been through two splits on XOM so my price per share is much lower than today's market price. I would think my return on investment is running around 6 or 7%, that ain't bad MaGee.
I like the whole oil/gas arena and have been adding to the Vanguard ETF...VDE...... on pullbacks. As the tech wreck continues the dividend payers in energy as well as Telecom look more and more attractive.
The gentleman who talked about Costco gas and there long lines is spot on. Many Americans are very hypocritical on big oil. They pretend to be earth minded and green but hell will come if there isn’t gas for there F-150 or SUV. Our need for oil and gas isn’t going away in any of our lifetimes.
Buyandhold 2012 profile picture
"Exxon Mobil has dramatically underperformed Chevron....."

Not over the long term. Over the long term, Exxon Mobil has outperformed Chevron.

I like both stocks. I like Exxon Mobil slightly more than Chevron.

Both of them are worth considering buying at the right price.
64transformation profile picture
Not over the long term...really....must be some new math...check the numbers.
Here is a paragraph from a story discussing the climate change lawsuit in Calif against the oil companies. It turns out the lead attorney against the oil companies is the same shyster lawyer that sued the tobacco companies. Just a money grab from this dirt bag.

Berman, the plaintiffs' lead attorney, is a high-profile trial lawyer who played an instrumental role in bringing a similar suit against the nation's largest tobacco producers in the 1990s. Berman worked on the team that helped craft the Tobacco Master Settlement Agreement (MSA) of 1998, which at the time was the largest settlement in history. The MSA resulted from a suit between the four largest tobacco producers in the United States and the attorneys general of 46 states. The attorneys general argued the states were entitled to compensation for the medical costs associated with caring for individuals suffering from smoking-related illnesses. The tobacco companies settled the suit, agreeing to pay $206 billion over the first 25 years of the agreement. The companies also agreed to impose restrictions and prohibitions on marketing tobacco products, especially to children and youth.
03 Apr. 2018
Exxon would not have needed to create a new "strategy" if it had the right one to begin with. Chevron gets it. It's Australian monster investments will be yielding dividends for decades.
another company sleeping at the wheels while the world is turning away from fossil fuels. they have less than 5 percent investment in renewables. with world wide consumers shifting to electric
matt, oh? demand is growing, BA growing sales too.
Matt and beyond,

Of course you are right, about them being slow to adjust the helm, and, like the Titanic, they'll be slow to respond. However, that's the advantage of NOT being just 1 ship in the ocean. The "Titanic" is actually more like the Upstream domestic Shale-Basins, within Exxon's larger "fleet". After all, Did The White Star Line Go Bankrupt after April 15th, 1912 loss of the Titanic and over 1500 human passengers and crewmembers?
Exxon will adapt because Royal Dutch Shell already is too good effect, regarding Renewables, Alternatives, and Power Generation. BP and Total too!

ExxonMobil's huge scale may make their modernization efforts appear glacier like, in speed, but their deeper pockets and Credit Facility allows them to take larger steps that other, smaller diversified companies have worked out and paid for their mistakes already. That, without Sleeping CEO Tillerson, is likely to happen.

Don't think so? 10 years ago a popular documentary titled, "Who Killed The Electric Car Was Released". Now Ford and GM, among all the others in the EU and Asia and introducing dozens of new models over the next 3 years.
planning to sell all my holdings in a any run up. if I get it
Great article, I did buy Chevron a couple of years ago, but sold it not so long ago and did buy Exxon instead. This is part of my long term dividend income portfolio. However I sometimes switch around a little, like with CVX and XOM.

Long XOM and BP.

In the long run its best to have both, but if you look at the past, including the past 4 years, you'll notice that when the Oil market gets dicey, Chevron actually, briefly traded for less than Exxon, whereas today it is >1.5x Exxon in share price. So while Chevron has a undeniably greater upside potential, the downside was crushed during the 1st quarter of 2016, for instance. During the same timeframe that Chevron showed losses for multiple quarters, almost unprecedented, Exxon never went into the Red even with incompetent CEO Tillerson, at the helm. Darren Woods talks about big "short-cycle" domestic Upstream projects, but he's got his eye turned discreetly towards the less exciting, but more certain in all circumstances, Downstream and Chemical sectors. ExxonMobil's traditional insurance against things like a possible Saudi Aramco IPO or just another Upstream downturn.

If I Wanted to Add more Chevron --

I'd just wait for the inevitable downturn in crude oil prices, especially WTI @<$50! That's when the chatter will turn negative and Chevron may dip severely, certainly compared to Exxon. In such an event, I would consider selling a large portion of the sizable Discretionary DSPP position I have in Exxon via Computershare and BUY Chevron in several large gulps. I wouldn't touch Trust shares where Exxon outnumbers Chevron ~5 to 1.92. However, the Discretionary shares are --- Discretionary. It's a method that works like a see-saw so long as both companies are very secure, for long term positions. As much as any Conventional, vertically integrated, and Diversified, Oil and Gas Mega-Caps can be depended on, these 2 companies can.

What I have against Royal Dutch Shell and BP are;
A)- "MY" understanding of their business models and probable outcomes is less certain than Exxon and Chevron.

2)- BP and RDS don't necessarily run "counter-cyclically" in a potentially challenging environment (necessary for planned "Arbitrage Advantage" trading to be 'predictably beneficial'). Looking at a Share Price chart, with the exception of a few well known events (e.g., BP's Oil Spill), BP and RDS have traded in very similar cyclical patterns.

3)- BP and RDS are paying high current yields, but consistently increasing annual dividends, as an essential component of either companies business models is lacking.

4)- Both BP and RDS are more "Overleveraged" before any potential downturn and their Payouts are too high. Okay Shell is having a great couple of years, but they've got a great CEO and senior management team that supports EVs, Alternative and Renewable Energy Development, Power Generation, and more Downstream expansion in types, numbers and overall geographic presence in emerging markets. Shell is simply outperforming everyone - NOW - but upper management and the CEO's vision and competence, so far, has given them a leg up.

In the Energy market, trends only exist as concrete and tangible in the same way other beliefs are adhered to. Only as long as nothing changes in a highly changeable environment -- the Global Energy Market
Dividend Latitude profile picture
"Okay Shell is having a great couple of years, but they've got a great CEO and senior management team ... Shell is simply outperforming everyone - NOW - but upper management and the CEO's vision and competence, so far, has given them a leg up."


Yes, Ben van B. & team are doing very well. Long RDS.B.

I enjoy your comments on XOM and CVX. Please keep writing them!

Dad was a Mobil Oil engineer his entire working career after college. That is, until the merger with Exxon. Then he worked for Exxon-Mobil until retirement.

If he were around today I think he would really appreciate your thoughts on XOM and CVX.

As for the article, I am glad to read that Gorgon is ramping up. I got so tired of reading about delays at Gorgon in the comments section of every article on CVX.
The difficulty XOM now has is because of the then do-nothing CEO 10 years ago. Their culture is so inhibiting of new ideas. Shame on their senior management and the board.
Rex Tillerson was as useless to Exxon as he was to the country as one its worst Secretary of State in history.
marriottmare profile picture
Stay long Exxon and wat h for future algae spinoff!

We have been long Exxon, since 1924. 2/9 of our household income, enough to buy our primary residence, 2 new cars, furniture, and open our Discretionary Diversification Securities Fund, $43k left over was paid in full with our semi annual dividends in 2014, of which Exxon provided ~2/9 of the funds. Algae spinoffs?
1924 was family and 1961 was me.
Exxon and Chevron have been perceived differently, especially recently by investors. Although Exxon has a Stronger Balance sheet, more scale and has more globally diversified mega-scale operations and subsidiaries, investors have more confidence in Chevron. Mainly, through a series of poor Upstream investment choices during the Tillerson administration, like XTO, in 2010, purchased when Gas was a more valuable asset based on projected Natural Gas prices, soon to crash harder than oil in 2016 as well as a series of "write-downs" on both O&G that caused Exxon's "Recoverable Reserves" and Upstream production to decline year-to-year for 2 consecutive years.

Those Several Components Broke the Belief in Exxon's Ultimate Sucess in the eyes of investors.
So What Now?

Exxon and Chevron are the 2 largest components of a trust fund of 28 components that we live on and that special needs adults that depend on my continued support depend on.

I Have Been Buying Exxon since 1961 and Chevron since 1977 but:

We always believed that Exxon would always rebound but that Chevron's returns would outperform Exxon. That was essentially true from the days when Exxon was Standard Oil of New Jersey and Chevron was Standard Oil of California. If Std. of N.J. was down, and happened to be with my Grandfather he'd get a call from Merill Lunch that they advised to sell. I recall he always said the same thing (as a child I could hear phone conversations although he had a "padded" soundproof door in his private study), "what is it trading for? ----- Silence "Buy 10,000, YES BUY -- Please call to confirm. ---- Thank you, good bye"

I was a body kid between WW2 & the Korean War. I didn't know what shares were, when my dad explained it, but I did understand what it meant when he said, "Don't Repeat That". I came to realize that my Grandfather, who owned a large Engineering firm with 2 clients, Mobil and Esso, plus the NYC Board of Education, had complete faith in Esso. If it went down today it meant it would be worth that much more next year. So now, although I have a lot of Chevron shares, my Grandfather would be impressed to know I bought Exxon 8x since it fell from ~$90 to $72, including today from Dollywood, where my incompetent adult son (youngest by 20 years) wanted to spend this week.

Superb background story and a great lesson in persistence and consistency. Thanks for sharing it!
Ron Burgundy’s Hair profile picture
Boomer is long CVX & biased towards the better major integrated w/LNG Export facilities enabling renewed growth.
By the way, no longer a Schwarzenegger fan now that he has lost his way and is suing XOM and others for "murder" by the industry "killing people" with "global warming". Its amazing what excess personal wealth does to the brain. How much more energy did Arnold use during his lifetime than the rest of us living ordinary lives ? Hypocrisy and Hollywood go hand in hand.
He should look into the pharma industry.

Plenty of meds there that will take his
mind off Exxon.
Arnold had heart valve replacement at 56 and is now in bad shape again, maybe he should be going after the drug companies as he is paying the price for the ones he took in the 70s and 80s :(
agree, driving his 80 Hummers.
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