ExxonMobil Raised Its Dividend for the 44th Straight Year and Plans $20 Billion of Buybacks in 2027. Here's How It Can Afford Both.
Key Points
ExxonMobil raised its dividend for the 44th straight year and plans $20 billion in share buybacks in 2027.
Strong earnings amid geopolitical disruptions have helped generate over $39 billion in free cash flow through Sept. 30.
The company has returned over $160 billion to shareholders since 2022.
On Oct. 30, ExxonMobil (NYSE: XOM) announced it would raise its quarterly dividend by 3.9%, increasing its payout to $1.07 per share. With this raise, ExxonMobil has extended its dividend growth streak to 44 consecutive years, a testament to its integrated business model and capital discipline.
But that's not all; the company also plans to buy back $20 billion in stock in 2027. Exxon's capital returns to shareholders illustrate its commitment to consistently rewarding shareholders. Its strong business performance enables it to pay for these massive dividends and stock buybacks. Here's how.
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ExxonMobil's earnings have surged this year, led by strong downstream performance
This year has been a boon for oil and gas companies. The ongoing conflict in Iran has disrupted the Strait of Hormuz, where roughly 20 million barrels per day of oil and roughly 20% of all global petroleum and liquefied natural gas (LNG) are traded, according to the U.S. Energy Information Administration.
In the third quarter, ExxonMobil's net income more than doubled year over year to $15.4 billion, while it has earned $34.1 billion through the first three quarters of 2026. Upstream performance has been strong, and earnings have grown 16%. But downstream has been far stronger, and earnings from its energy products have surged 303% to nearly $16 billion.
How ExxonMobil can afford its massive capital returns to shareholders
ExxonMobil's strong performance got a major boost from disruptions impacting oil and gas markets, but that's not the full story. The company has spent years cleaning up its balance sheet and focusing on quality, low-cost assets to lower its portfolio break-even price, with a goal of reaching $35 per barrel by 2027 and $30 per barrel by 2030.
The integrated oil giant will pay $20 billion to buy back its stock and about $18 billion in dividend payments next year. While this is a massive figure, it's backed by the company's strong performance, including over $39 billion in free cash flow through nine months.
This builds on ExxonMobil's strong returns for investors amid geopolitical tensions that are upending energy markets. Since Russia's 2022 invasion of Ukraine, which was another highly disruptive event for energy markets, ExxonMobil has returned over $160 billion in capital back to shareholders.
Is ExxonMobil stock a buy?
Share repurchases can fluctuate, but ExxonMobil has maintained its dividend record and boasts an impressive 44-year track record of raising its payout -- a testament to its diverse business and capital discipline. That said, the stock is up 38% since the start of the year, so investors may want to be patient and wait for oil prices to retreat before buying the integrated oil stock.
Courtney Carlsen has positions in ExxonMobil. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.