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Exxon Mobil Corporation (NYSE:XOM) and Chevron Corporation (NYSE:CVX), two of the largest oil companies in the US, are currently taking the global oil sector by storm. They are entangled in a high-stakes dispute over lucrative oil assets in Guyana. The clash between these energy giants has escalated as Chevron’s pending $53 billion acquisition of Hess Corp. aims to secure a strategic foothold in Guyana’s vast oil reserves, notably the Stabroek oil block.
Exxon’s Claim and Chevron’s Stance
Exxon, with a 45% stake in the Stabroek block, has adamantly asserted its right of first refusal over Hess’ assets in Guyana, citing a joint operating agreement (JOA). The JOA, a legal framework governing the operations, is under scrutiny as Exxon contends that any deal involving Hess must recognize its preemptive rights. On the other hand, Hess only has a 30% stake in the Stabroek block.
“We want to make sure the rights afforded to us under the JOA are recognized and conformed with,” Exxon CEO Darren Woods said during a recent interview with CNBC, adding, “It gives us the opportunity to … make sure that we’ re making a decision that’s in the best interest of the company and the shareholders.”
To this end, Exxon initiated arbitration proceedings at the International Chamber of Commerce in Paris, after Chevron disputed its assertion of a right of first refusal.
Chevron has remained resolute in its pursuit of Hess despite the challenges. The company expects the conclusion of the shareholder vote and the Federal Trade Commission’s inquiry into the deal by the second quarter, paving the way for the acquisition to be concluded by the end of this year.
Promising Dividends
Notably, Exxon, the largest oil producer in the US, is a Dividend Aristocrat stock and is expected to become a Dividend King within the next decade. The company has raised its dividends for 41 consecutive years as of 2023, with the latest hike announced in the fourth quarter of 2023.
Exxon currently pays $3.80 in dividends annually, yielding 3.28% on the current price. The oil behemoth’s four-year average dividend yield stands at 5.06%.
Chevron, on the other hand, boasts an even higher dividend yield, as it pays $6.52 per share annually. The company’s dividend yield stands at 4.01% on the current stock price. Furthermore, its average dividend yield over the past four years is 4.39%.
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Economic Headwinds
While both Exxon and Chevron have excellent dividend stocks, their finances have suffered as the macroeconomic turmoil continues.
Chevron’s first-quarter earnings report reflected a mixed picture, with profits declining due to challenges in its refining and international gas segments. The company’s revenues amounted to $46.72 billion in the first quarter, falling short of the consensus estimate of $50.66 billion. In addition, Chevron’s net income fell 16% from the same period last year to $5.55 billion. However, its adjusted earnings stood at $2.93 per share, beating the Wall Street estimate of $2.87.
Exxon’s first-quarter performance was also underwhelming, as the company’s net income declined by 28% year-over-year to $11.43 billion in the first quarter of 2024. The company attributed the poor performance to lower refining margins and plummeting natural gas prices.
The ongoing clash between Exxon and Chevron not only highlights the intense competition for valuable assets but also underscores the shifting dynamics within the energy landscape.
Diversifying with Private Market Real Estate
While Exxon and Chevron offer attractive dividend yields, investors may want to consider diversifying their portfolios with private market real estate investments. One compelling opportunity is The Carling on Frankford, a Class B, 274-unit, garden-style multifamily property located in Carrollton, TX, offered by RealtyMogul.
This value-add investment opportunity is being acquired off-market from a distressed seller by ClearWorth Capital, a vertically integrated multifamily owner with over 5,000 units under management in Texas. The Sponsor plans to implement a value-add renovation package to reprice the asset and close the gap in the market, potentially leading to higher returns for investors.
RealtyMogul has a proven track record of delivering attractive returns to investors. As of March 31, 2024, the platform has realized a total investment amount of $222,665,450 across 230 investments, with an overall realized IRR of 19.5% and an overall target IRR of 15.1%.
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By diversifying with private market real estate investments like The Carling on Frankford through RealtyMogul, investors can potentially enhance their portfolios with a combination of income and growth, complementing their holdings in dividend giants like Exxon and Chevron.
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This article Exxon vs. Chevron – The Battle Of The Dividend Giants originally appeared on Benzinga.com
