Exxon Mobile, the U.S largest oil producer by volume, announced its dividend on Wednesday, keeping the dividend flat at 87 cents a share. It is the first time in the history of the company that the shareholder dividend has not been increased.
The reason behind this is the sharp decline in global demand for oil&gas and energy prices slumped due to COVID19 pandemic. Only in the U.S., prices are down by 39%.
The Company is looking to cut down the cost and jobs that could be announced on Friday. The cost-cutting will allow the company to make the hefty payout. The company share price is $3.48 so the annual dividend is equal to 10.6% of its share price.
The company quarterly estimates are showing poor performance and this year company is projecting a $2 billion loss for full-year.
Analyst, Pavel Molchanov said that the company has a narrow to maintain the dividend without taking more loan and it is fear that the cash balance of the company can go into negative by the end of 2021, due to the dividend even though U.S. oil prices are trading around $45 per barrel.
The other oil companies such as BP,ASA, Royal Dutch Shell reduced their shareholder payouts by at least half. Officials at Exxon said that they are committed to main the dividendwhich reached to $14.7 billion last year.
The Jennifer Rowland, an analyst from Edward Jones said that there are higher chances of dividend reduction in 2021 if demand does not fully recover.
The company shares are trading at its lowest price of $31.57 on Wednesday, in two decades. The dividend announcement was made after market close.
Exxon Mobil Corporation (NYSE:XOM) shares traded lower over the last trading session, losing -3.81% on 10/28/20. The shares fell to a low of $31.52 before closing at $31.57. Intraday shares traded counted 42.04 million, which was -66.88% lower than its 30-day average trading volume of 25.19M. XOM’s previous close was $32.82 while the outstanding shares total 4.27B.
The firm has a beta of 1.29, a 12-month trailing P/E ratio of 20.96, and a growth ratio of 2.50. The stock’s Relative Strength Index (RSI) is 32.11, with weekly volatility at 3.24% and ATR at 1.06. The XOM stock’s 52-week price range has touched low of $30.11 and a $73.12 high.