Exxon Mobil: A Hedge Fund Favorite for Dividend Investors

Exxon Mobil Corporation (XOM) has long been a favorite among hedge funds, and for good reason. The company's strong dividend history, consistent financial performance, and diversified business model make it an attractive investment option. In this article, we will explore the factors that make Exxon Mobil a reliable dividend stock according to hedge funds and compare its dividend performance to other energy sector stocks favored by these professional investors.



Exxon Mobil's Dividend Growth and Yield

Exxon Mobil has a history of increasing its dividends for 42 years running, demonstrating a commitment to returning value to shareholders. As of January 12, 2025, the company offers a per-share dividend of $0.99 every quarter, with a dividend yield of 3.72%. This consistency and attractive yield make Exxon Mobil an appealing choice for income-oriented investors.



Strong Financial Performance and Diversified Business Model

Exxon Mobil's strong financial performance supports its ability to continue paying and increasing dividends. In Q3 2024, the company reported $90.02 billion in revenue, surpassing analysts' expectations by $1.66 billion. Additionally, Exxon Mobil generated $17.6 billion in operating cash flow and $11.3 billion in free cash flow for the quarter. This robust financial performance is a testament to the company's resilience and ability to generate cash even in challenging market conditions.

Exxon Mobil's diversified business model, involving upstream (exploration and production), midstream (transportation and storage), and downstream (refining and distribution) segments, helps stabilize earnings by offsetting fluctuations in prices. This diversification makes the company more resilient to market downturns and enhances its long-term prospects.

Leading Position in Carbon Capture and Storage

Exxon Mobil continues to lead in carbon capture and storage, having secured a new agreement that raises its annual CO2 offtake commitments to 6.7 million metric tons. This leadership position in sustainability initiatives can enhance the company's long-term prospects and dividend growth potential.

Hedge Fund Interest in Exxon Mobil

As of the end of Q3 2024, 86 hedge funds in Insider Monkey's database owned stakes in Exxon Mobil Corporation (NYSE:XOM), down from 92 in the previous quarter. These stakes are valued at nearly $7 billion in total. First Eagle Investment Management was one of the company’s leading stakeholders. This significant interest from hedge funds indicates that many professional investors see value in Exxon Mobil's dividend growth and yield.

Exxon Mobil vs. Other Energy Sector Stocks Favored by Hedge Funds

Exxon Mobil's dividend performance compares favorably to other energy sector stocks favored by hedge funds. While Chevron (CVX) and ConocoPhillips (COP) also have strong dividend histories, Exxon Mobil's 42-year streak is one of the longest among major energy companies. Additionally, Exxon Mobil's dividend yield of 3.72% is higher than the average dividend yield of the S&P 500 Energy Sector and is competitive with other energy sector stocks favored by hedge funds.

Geopolitical Risks and Energy Market Dynamics

Geopolitical risks and energy market dynamics play a significant role in hedge funds' investment decisions regarding Exxon Mobil. By monitoring these factors and adjusting their positions accordingly, hedge funds can capitalize on opportunities and mitigate risks associated with investing in the energy sector. Exxon Mobil's strong financial performance and diversified business model help the company navigate geopolitical challenges and energy market fluctuations, further enhancing its appeal to hedge funds.

In conclusion, Exxon Mobil's dividend growth and yield, strong financial performance, diversified business model, and leadership in carbon capture and storage make it an attractive investment option for hedge funds. The company's consistent dividend history and competitive dividend yield position it as a reliable dividend stock in the energy sector. As hedge funds continue to seek out attractive income opportunities, Exxon Mobil remains a top choice for professional investors looking to capitalize on the company's strong dividend performance and overall investment potential.