Exxon's 34-Year Dividend Over?

Exxon Mobil currently pays out more in dividends than it generates in cash flow, but things should turn around next year.

You are receiving this email because you signed up to receive our free e-letter, or you purchased a product or service from its publisher, The Oxford Club. If you are having trouble viewing this email, click here to view it in your browser. Brought to you by The Oxford Club Wednesday, August 31, 2016 Easy Income Secrets Most Americans Don't Know About Have you heard of "reverse savings" and how they can pay you 17% a year? Would you like to make an extra $24,000 in real estate this year without buying or selling a single house? Did you know the government might be holding $50,000 in "unclaimed benefits" on your behalf? Watch This Free Presentation to Discover These "Easy Income Secrets." The Safety Net: Is an Impressive 34-Year Dividend History in Jeopardy? Marc Lichtenfeld, Chief Income Strategist, The Oxford Club Editor's Note: After receiving several requests for an analysis of Exxon Mobil's dividend safety, I decided to take a look at it for today's Safety Net column. If you have a stock whose dividend safety you'd like me to investigate, leave a comment with the ticker symbol or feel free to "like" someone else's request. And be sure to check out SafetyNet Pro for the dividend safety ratings of more than 1,000 stocks. Exxon Mobil (NYSE: XOM) is the sixth-largest publicly traded company by market cap. That's certainly impressive. But what's not so inspiring is its numbers. Declining oil prices have crushed earnings and cash flows for most oil companies. Exxon Mobil is no different. In fact, things have gotten so rough that the oil giant currently pays out more in dividends than it generates in free cash flow. And as my boxing trainer said (at least, after he watched me spar for the first time), "That's not good."   "The best retirement investment you can NOT have" (Once BANNED, Now LEGAL) For the past 82 years, a ridiculous SEC rule has allowed only elite investors to take stakes in exciting, young private businesses. But on May 16, 2016, with little fanfare, the SEC changed the law. Today, new rules now guarantee you the right to get in on many of the types of companies providing huge 100-fold returns... like Airbnb, where a $100 stake from 2009 is now worth $797,000... or Uber, which turned $100 into $1.25 million over the past 7 years. A few years ago, CNBC called these types of opportunities, "The best retirement investment you can NOT have." But now you CAN get in, often starting with as little as $100. Details here. Cash Flow Forecast Exxon Mobil is forecast to generate $7.4 billion in free cash flow this year, nearly double last year's $3.9 billion. But it's expected to pay shareholders $12.3 billion in dividends. While cash flow is moving in the right direction, it's not enough to cover the dividend this year. However, if next year's projections are right, Exxon Mobil will more than double free cash flow to $16.8 billion. That should not only cover the dividend, but also keep the payout ratio right around my 75% threshold, which is great. Typically, I look for companies using 75% or less of their free cash flows to pay dividends. That way, if times get tough, these companies should still have enough cash to pay their dividends without having to cut them. While things are looking better for next year, today's numbers stink. And they stunk worse last year. The only thing saving Exxon Mobil from an "F" dividend safety rating is its stellar history of dividend raises. The company has boosted its dividend every year since 1982. Back then, Ronald Reagan was just getting comfortable in the Oval Office, and Dallas ruled the television airwaves. That's a heck of a track record. Exxon Mobil's excellent track record bumps it one notch above SafetyNet Pro's lowest rating. If next year's cash flow increases to the point where it meaningfully exceeds the amount paid in dividends, the stock could get upgraded to a "C." But if Exxon Mobil's cash flow doesn't reach the projection, management may have to think about the unthinkable - ending the 34-year streak of dividend hikes. Dividend Safety Rating: D Good investing, Marc Leave a Comment! Complimentary Hard Copy of Where in the World Should I Invest? Karim Rahemtulla, one of the top currency traders in the world, says the dollar is about to suffer a major downturn. Claim a free copy of his book here explaining exactly what you should do with your money now. The supplies are limited, so act quickly.   Recent Articles From Wealthy Retirement Recent Articles From Wealthy Retirement Cooler Heads Prevail: Stay Calm This Election Season and Your Portfolio Will Thank You by Steve McDonald Tuesday, August 30, 2016 A Clinton or Trump presidency may rock our economy in the short term, but no single person can decimate it. Cool your jets to protect your nest egg. Watch Video... Watch Video... Stop Your Employer From Sabotaging Your Retirement Today by Kristin Haugk Monday, August 29, 2016 Consider opening an IRA or investing in lower-cost fund options if excessive fees charged by your employer-sponsored 401(k) plan are taking a bite out of your returns. Read On... Read On... Holy Cow... Are You Prepared for the Next Green Energy Trend? by Steve McDonald Friday, August 26, 2016 Regulators in the Golden State are pitching a unique green energy solution. 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