Exxon Mobil Corporation (NYSE:XOM) Earning Its Cost of Capital to Pay Dividends

October 13, 2016

Managing Director Arthur Norton of Araglan Capital Management says his firm’s largest position is in the energy sector and in Exxon Mobil Corporation (NYSE:XOM).

ExxonMobil is an extremely well-managed and diversified exploration and production company. They are the largest in the world. We highlight their management, which I think is very good, probably the best in the industry, and it has performed for us shareholders as long as we’ve owned it.

They have a highly manageable debt level. Although, we constantly look at their debt-to-equity ratios, even though they’ve used debt recently to be able to sustain the dividends that they want, which is very beneficial to us […]

One of the focuses that we have with a company is: Are they earning their cost of capital? And Exxon definitely is earning its cost of capital to allow it to pay the dividend. To the extent it does, it has an impact upon the committed deliveries, also its continued exploration. Yes, it has that potential, but it also has the financial flexibility to be able to use that, which is what they’re doing to be able to have that adequate resource both to pay the dividend they have as well as to do the explorations they do worldwide.

arthur-norton
Arthur Norton