4. Exxon Mobil Corporation (NYSE:XOM)
Number of Hedge Fund Holders: 83
Dividend Yield as of June 3: 3.60%
Exxon Mobil Corporation (NYSE:XOM) is a Texas-based integrated energy company that is also a member of the Dividend Aristocrat list. The energy giant has been increasing its annual dividends every year for the last four decades. For Q2 2022, Exxon Mobil Corporation (NYSE:XOM) declared a dividend of $0.88 per share, payable on June 10.
Due to the rally in crude oil prices as the global economy started to recover following the end of lockdowns across the world, the stock price of Exxon Mobil Corporation (NYSE:XOM) has increased by more than 50% YTD. At a breakeven of $41 per barrel of WTI crude, Exxon Mobil Corporation (NYSE:XOM) can be expected to post a healthy bottom line at the end of the year. The company is working on reducing this to $27 per barrel by 2027. The diversified value chain across the Energy sector allows Exxon Mobil Corporation (NYSE:XOM) to maintain a healthy dividend yield.
Here’s what Goehring & Rozencwajg Associates said about Exxon Mobil Corporation (NYSE:XOM) in its Q3 2021 investor letter:
“After successfully replacing 25% of Exxon’s board of directors despite owning just 0.02% of the outstanding equity, Engine No. 1, the climate-focused activist hedge fund, met with Chevron’s management late last summer. In discussions that were later described as “cordial,” Chevron executives shared their plan to reduce carbon emissions. Subsequently, Chevron announced new plans to further reduce carbon output, along with their intention to appoint a new director with “environmental expertise.” Although it remains unclear exactly what Engine No. 1 is planning, rumors suggest the fund has contacted other investors, strongly suggesting they intend to launch a second campaign in the not-too-distant future.
What should Chevron expect?
It was recently reported by The Wall Street Journal that Exxon was considering abandoning two massive natural gas projects: the 75 trillion cubic foot (tcf ) Rovuma LNG project (capital cost $30 bn) and the 5 tcf Ca Voi Xanh offshore-Vietnam gas project (capital cost $10 bn). Exxon board members (most likely including the three supported by Engine No. 1) have publically expressed concerns about both projects.
According to internal reports, these projects are among the highest CO2 producers in Exxon’s pipeline; it is no surprise these projects have been called into question. However, we find the plight of both fields to be perplexing since production would almost certainly be used to displace coal in electricity generation, cutting CO2 emissions by nearly 50%. This fact seems to be lost on the new Exxon board members.”
At the end of Q1 2022, 83 hedge funds held a stake in Exxon Mobil Corporation (NYSE:XOM).
