Despite Dynamite Dividend, Don’t Buy Into Exxon Mobile Just Yet
9/3/2020 10:29am EDT
By Tyler Craig, Tales of a Technician
The gap between energy stocks and the rest of the market continues to widen. And nowhere is that more apparent than on the Exxon Mobil (NYSE:XOM) stock chart.
A view of a well-lit Exxon Mobil (XOM) gas station in Pasadena, CA during nighttime.
Source: Michael Gordon / Shutterstock.com
Despite the S&P 500 blasting off to new heights, XOM has proven altogether unable to get off the mat. Tuesday’s drop pulled it to a new four-month low, returning its year-to-date loss to -43%.
Meanwhile, the Nasdaq is up by roughly a gazillion percent. Absolute weakness, relative weakness — you name it, Exxon suffers from them all.
But what about that juicy 8.8% dividend yield? If there’s anything that makes owning such a terrible underperformer palatable, it’s that. Sure, Exxon Mobil is a dog, but at least I’m getting paid nearly 10% to wait for its eventual resurrection! Or so the justification goes.
I don’t fault anyone for being tempted by the massive payout, but I’d caution you against looking at the dividend in isolation. You mustn’t lose sight of the total return, which accounts for both dividends and price movement. If the stock is sinking faster than quarterly payments are coming, then you’re still losing money no matter how large the cash flow.
There are two big things Exxon Mobil stock needs to make it a dividend play worth pursuing.