There is a lot to be liked about Exxon Mobil Corporation (NYSE:XOM) as an income stock, over the past 10 years it has returned an average of 3.0% per year. The company is currently worth US$339.89b, and now yields roughly 4.1%. Should it have a place in your portfolio? Let’s take a look at Exxon Mobil in more detail.

Check out our latest analysis for Exxon Mobil

How I analyze a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is their annual yield among the top 25% of dividend payers?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has the amount of dividend per share grown over the past?

• Is its earnings sufficient to payout dividend at the current rate?

• Based on future earnings growth, will it be able to continue to payout dividend at the current rate?

How well does Exxon Mobil fit our criteria?

The current trailing twelve-month payout ratio for the stock is 63.8%, meaning the dividend is sufficiently covered by earnings. Going forward, analysts expect XOM’s payout to remain around the same level at 60.5% of its earnings, which leads to a dividend yield of 4.2%. Furthermore, EPS should increase to $5.04.

If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. XOM has increased its DPS from $1.6 to $3.28 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock.

Compared to its peers, Exxon Mobil has a yield of 4.1%, which is high for Oil and Gas stocks.

Next Steps:

With these dividend metrics in mind, I definitely rank Exxon Mobil as a strong income stock, and is worth further research for anyone who considers dividends an important part of their portfolio strategy. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three key factors you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for XOM’s future growth? Take a look at our free research report of analyst consensus for XOM’s outlook.

2. Valuation: What is XOM worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether XOM is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.