Here's How Many Shares Of Exxon Mobil Corp You Would Need To Earn $500 Per Month In Dividends

Dividend investing is back in the limelight as investors prepare for a higher-for-longer interest rate scenario amid elevated inflation and volatility. Why do investors pile into dividend stocks when rates are high? An analysis from Global X shows that high-dividend stocks outperformed the S&P 500 by about 3% annually from 1960 through 2017. They also outperformed the broader market in seven of the 10 rising interest rate periods since 1960.

In this environment, investors seek major companies with strong dividend growth records and balance sheets. Exxon Mobil Corp XOM, with 41 consecutive years of dividend increases, is one of the most popular dividend stocks among income investors. In this article, we will learn how to earn at least $500 per month from ExxonMobil, but first, let’s examine the latest buzz around the stock.

ExxonMobil shares are up about 10% so far this year. Goldman Sachs recently included the stock in its list of companies with high liquidity. The firm noted that investors are ready to pay a premium for stocks with solid liquidity because of their low trading costs and the "flexibility" they offer in different environments. Last month, Morgan Stanley started covering the stock with an Overweight rating and a $145 price target. Morgan Stanley analyst Devin McDermott noted that the stock is trading at a 55% discount compared to the broader market despite having a cash flow per share growth of 50% above the S&P.

How Much Do I Need to Invest in XOM to Earn $500 Per Month in Dividends?

Exxon Mobil Corp currently pays a quarterly dividend of $0.95 per share or an annual dividend of $3.80 per share. The stock closed the June 7 trading session at $112.75.

A $500 dividend income from ExxonMobil would mean you’d earn $6,000 per year. To find the number of shares you need to own to reach this income, we will divide this yearly income by ExxonMobil’s annual dividend per share.

Number of shares needed= $6000/$3.80 = 1578.94

The total investment needed to earn $500 per month from XOM: 1579 shares X $112.75 (the per-share price of XOM)

=$178,032

To earn $500 monthly from ExxonMobil, you’d need to own 1579 XOM shares based on the June 7 closing price. That would be a total investment of about $178,032.

What About $100 Per Month?

Let’s revise our goal to just $100 per month in dividend income and calculate the required investment amount.

A $100 income per month means $1200 per year.

Let’s calculate the total number of XOM shares you’d need to buy to earn $100 per month:

$1200/$3.80 = 315.789 shares.

That means to earn $100 per month in dividends from ExxonMobil, you’d need to buy about 316 shares of the company, which would cost $35,629.

ExxonMobil’s Dividend Analysis

Over the past five years, ExxonMobil’s annual dividend growth rate was 2.20% yearly. As of the end of the first quarter, the stock’s payout ratio is 46%, much lower than the industry average of 66%. During the first quarter, the company generated $14.7 billion in cash flow from operations, while its free cash flow came in at $10.1 billion in the first quarter. The company paid $3.8 billion in dividends and carried out $3.0 billion worth of stock buybacks. The average price target set by Wall Street analysts for XOM is $132.88, which presents an upside potential of about 17% from the June 7 closing price.

Are You Missing Out On Higher Yields?

The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through dividend stocks… Certain private market real estate investments are giving retail investors the opportunity to capitalize on these high-yield opportunities and Benzinga has identified some of the most attractive options for you to consider. 

For example, the Jeff Bezos-backed investment platform just launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. The best part? Unlike other private credit funds, this one has a minimum investment of only $100. 

Don't miss out on this opportunity to take advantage of high-yield investments while rates are high. Check out Benzinga's favorite high-yield offerings.