For the first time in 13 years, Exxon Mobil Corp. froze its dividend. Unchanged from March’s outlay, Exxon will pay 87 cents a share in June.
Exxon was hit by Covid-19 lockdowns that destroyed energy demand. The company was forced to downsize an ambitious investment program. To conserve cash, Exxon slashed its 2020 capital budget by $10 billion but to support higher payouts, it was not enough.
The decision to freeze dividends may not wreck the company’s multi-decade streak of annual increases. The annual outlay will be 1.5 percent above 2019 or $3.48 a share even if the company maintains quarterly payouts for the rest of 2020 at the current level.
To protect the dividend, Exxon had few levers left to pull after slashing capital spending. Its rivals Total and Royal Dutch Shell are saving cash by crimping share buybacks, but Exxon sacrificed those in 2016, during the last crash.
