Apart from my weekly sharebuilder purchases, I try to make 1 or 2 big purchases a month in order to meet my goal of investing $35,000 this year. The last big purchase was towards the end of April when I added to my NOV position.
After almost a month, I had another big purchase. I don’t want to say much about Exxon Mobil. The company is one of biggest oil companies in the world and has been a consistent performer. The oil sector continues to be weak and most predictions state that the oil price will be weak for the next couple of years. We will have to wait and see. The big companies have already braced for this by cutting capex in order to save the cash flow. But the oil price will definitely have an impact on the EPS like witnessed in the recently quarterly results from the oil companies.
Exxon’s recently quarterly EPS was $1.17 compared to $2.10 in same quarter in 2014. Revenue too has dropped by a third compared to the same quarter of 2014. But with the Capex cuts, the EPS should improve a bit in the next couple of quarters even with lower revenues.
I purchased 30 shares of XOM at $85.00 on 5/27/2015. With commission, the total cost comes to $2,557.00. With a quarterly dividend of $0.73/share, the yield on cost comes to 3.42% and this purchase adds $87.60 to my forward annual dividends.
The stock is a dividend champions with 33 years of consecutive dividend raises. Most recently, they increased the dividend earlier this month from $0.69/share to $0.73/share. That’s a good 5.8% increase in the current market conditions. This purchase is slightly bigger than my usual range of ~$1,500 because I was left with about $2,600 in my wife’s IRA account. These are contributions from 2014. I didn’t want to invest ~1500 in XOM and then pick another stock for ~1100. XOM is a nice company to be invested in for the long term and I don’t mind picking up some more shares.
Morningstar has a fair value of $98.00 for the stock and it is rated 4 stars.
This purchases increases my total annual projected dividends to $2,793.22.
The portfolio page will be updated soon to reflect this purchase.
Disclosure: Long on all stocks mentioned above
8 thoughts on “Recent Purchase – Exxon Mobil (XOM)”
Great purchase. We were very close to adding some more XOM yesterday but opted for PG instead. The divergence yesterday was interesting as WTI had a big gain but many of the major oils were flat or even down. The long term story is still intact though as people will be using fossil fuels for the foreseeable future. Your goal of $35k is great. Here’s hoping you crush it.
All the best.
Thanks FD. I am looking to add to my PG position as well, but still feel that the P/E is a bit high for a mature company like PG. I am hoping that the restructuring efforts help PG to increase the earnings in the years to come.
I like the way you are stripping things down and focusing on bread and butter purchases. I need to follow your lead. Great pick!
Thanks MDP. You are doing great as well with lot of energy purchases in the last few weeks including CVX, XOM and Shell. I am looking to add to my CVX position as well to average down. The current price of ~102 looks attractive.
I’m still convinced oil will come back. It’s only perfect timing for new investors or reinvestments. Although I didn’t like the drop that much at beginning of the year! 😉
I am hoping the same as well. Oil had a small rally lately, but has dropped back again. The stocks are again closer to their 52 week levels.
Good choice with XOM in my opinion. They seem to care about keeping dividend increases. Hopefully, they can continue their 33 year streak.
Thanks DD. Looking forward to increased dividends as well as nice growth for the future.