Exxon is an oil and gas company that explores for, produces, and refines oil around the world. Exxon qualifies as the world’s largest refiner and one of the top manufacturers of commodity and specialty chemicals.
XOM’s current 10 year dividend growth rate is 8.32%
Any investor, who’s main goal is to preserve capital, should seek, in all his or her investments, a significant difference between the current value of a business and the price in which the business can be bought. This insures protection in case of an unfavorable event and to maximize the investment return if the analysis is confirmed.
In the words of his disciple, Warren Buffett: “Never depend on a good sale. Get a purchase price so attractive that even a mediocre sale will produce good results.
Although given the title of “Dividend King” we must be vigilant in maintaining price discipline. We typically purchase operating companies at 8-10 times Cash Flow. However, a stock like this warrants special attention due to its size and dominance of their market. Chances are no other company will be able to purchase this behemoth of a company, therefore we will put a value on the business of 30 times Cash Flow. The goal is to purchase operating companies for at least half their value, with that said we will purchase this company up to 15 times Cash Flow.
Conclusion & Valuation
XOM has consistent rising dividends, almost zero debt and strong cash flow. Please don’t be alarmed by the drop off of cash flow during 2008/2009. This what during the financial collapse and the price of oil literally fell about 75%.
I am buying up to $76.20 and not a penny more!