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ExxonMobil: The Ultimate Future Dividend Play
Posted January 30, 2012
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By Pey Shadzi
Right here and now, I'm going to ask you to answer an extremely hypothetical question:
If TimeTravel Inc., a purely made up company, could actually build a bona fide time machine -- one that worked and would send you back to the past -- would you go in order to pick up shares of your favorite stock in its heyday? Or, rather, would you just simply purchase a stake in TimeTravel Inc. during present time expecting massive future growth?
It may sound nuts, but I might just as soon stick with the present day. I mean, traveling back in time is so 90s, right?
While the scientific-types in the room continue to debate if it's even possible, I'll go out on a limb and say ExxonMobil (XOM) might just fit the bill as a stock you might actually have a difficult time deciding over. Should I travel back in time to purchase it in the 80s or to just take the lazy man's route and purchase today for future growth?
Let's take a look at the financials ...
With $420 billion in annual revenue and $11 billion in cash on hand, XOM is sitting pretty. Though it's only sporting a 2.2% dividend, XOM's payout ratio is an extremely desirable 22% which means they surely can cover this dividend and definitely raise it in the future. $17 billion in debt is highly manageable and with a current and forward P/E of just over 10 and a PEG ratio of 1.18, it's difficult to argue XOM is significantly overvalued at this point. Better yet, with a history of raising dividends year-after-year since 1982, it's unlikely the dividend is in danger by any means. READ FULL ARTICLE HERE
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