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Why Don't You Buy 4.1%-Yielding Exxon Mobil For Your DGI Portfolio?

Apr. 04, 2018 3:14 PM ETExxon Mobil Corporation (XOM)49 Comments
Achilles Research profile picture
Achilles Research


  • Exxon Mobil makes an excellent long-term value proposition for income investors seeking a high-quality dividend.
  • I think the drop is a good opportunity to add XOM to a DGI portfolio.
  • Exxon Mobil will most likely continue to raise its dividend payout going forward.
  • XOM offers income investors an entry yield of 4.1 percent.

Exxon Mobil's (NYSE:XOM) shares have slumped precipitously in 2018 as part of a wider market correction and a drop in crude oil prices. That said, though, I think the correction is an excellent opportunity to scoop up shares of Exxon Mobil for a DGI portfolio. The energy company is a high-quality income vehicle raking in loads of cash. As a result, Exxon Mobil has a low-risk dividend that is more likely to go up over time than it is to go down. An investment in ExxonMobil yields 4.1 percent.

Massive Correction Creates Entry Opportunity

Exxon Mobil's shares have taken it to the chin in 2018. Year-to-date, the energy company's share price dropped ~10 percent as volatility crept back into the stock market. Investors quickly sold Exxon Mobil into the weakness, which I think was a big mistake.

Here's Exxon Mobil's share chart depicting the crash in the first quarter of 2018. Shares fell from about $90 to the low $70s but now appear to be bottoming out.

Source: StockCharts

A lot of factors have weighed on the stock market and Exxon Mobil lately:

1. Big tech has come under growing pressure as far as data privacy is concerned. The sell-off in tech has led the entire stock market lower;

2. The United States and China are going back and forth, hitting each other with new tariffs, raising concerns over the possibility of a large-scale trade war;

3. Interest rates are rising, which is typically seen as a hurdle for stocks; and

4. Oil prices dropped in 2018.

Here's the oil price chart for WTI and Brent crude.

ChartWTI Crude Oil Spot Price data by YCharts

The good news is that oil prices have started to rebound again, suggesting that the drop in Exxon Mobil's valuation is exaggerated. Exxon Mobil, after all, is one of

ChartXOM Dividend data by YCharts

This article was written by

Achilles Research profile picture
I am a dividend investor and look for undervalued investments in the stock market. I identify misunderstood and undervalued equity investments and hold those securities until their price approximates my estimate of intrinsic value. I am a long-term investor only. I am building a $100,000 high-yield income portfolio. I am running this portfolio as an experiment to see if long-term sustainable income can be generated from a diversified pool of high-risk, high-yield securities. I am willing to accept high risk in order to meet my performance goals.

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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