Dividend Stock Wednesday: Exxon Mobil (XOM)

Note: I use a combination of the Stock Selection Guide Software and its methodologies from the CSA and my own investment approach to perform the bulk of my analysis on stocks. This is not a recommendation to buy a stock – it is my analysis only. Please do your own research.

This weeks Dividend Stock Wednesday kicks of the first time I am using a new format, partially inspired by the work of Dividends4Life. It is still a work in progress, but it is some further insight into my approach to looking a dividend growth stocks.

The stock I am looking at this week is Exxon Mobil (XOM). XOM recently entered the Dividend Aristocrats as it has 25 years of uninterrupted dividend increases, which is a big plus for the stock. However, I do not like the valuation of the stock nor a couple of other fundamental items. Below are two images that present the results of my analysis. Page 1 is the data sheet and page 2 is a description of each of the fields and how the scoring works.

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Click to Enlarge

Overview:

The Dividend Guy Rating: 5.5 out of 10 (I look for at least 7 out of 10)
Buy Price Range: $66.39 to $94.66
Current Price: Overpriced
Dividend Growth Rate: Does not meet my 10% growth rate requirements at only 5.62%
EPS and Revenue Growth: The EPS growth over the past 5 years has been very strong, but over the past 10 years both earnings and revenue has been not as consistent as I typically like to see.

Keep in mind that Exxon is in a cyclical business so I suspect that the company may see some pressure in the next few years on earnings, especially with depressed gas prices we are seeing. In addition, Exxon is a massive company and consistent growth at its size is difficult, but not impossible. It will require strong leadership and strategic decision to ensure the company can continue to grow earnings and revenue at the pace they are doing now. As such, I would need to see the company’s share price much closer to the low part of my buy range before I were to pull the trigger.

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