2019 and 2020 were not good for Exxon Mobil (NYSE: XOM)... or the rest of the oil industry. Oil prices plummeted, famously turning negative for a brief moment. As a result, oil companies' free cash flow evaporated. Exxon's free cash flow fell by two-thirds in 2019 and was a horrific negative $2.6 billion in 2020. However, oil prices have since reversed and Exxon's free cash flow has rebounded strongly. This year, Exxon's free cash flow is projected to slip to $44.4 billion, a marked decline from last year's $58.4 billion but still sharply above the 2021 total. Importantly, the company paid $14.9 billion in dividends in 2022, for a payout ratio of just 26%. This year, based on the $44.4 billion in predicted free cash flow, the payout ratio is estimated to be just 34%. While that is a meaningful jump from last year's, it remains well within my comfort level. I like to see companies pay 75% or less of their free cash flow in dividends. |
No comments:
Post a Comment