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Few companies have a history as lengthy and controversial as Exxon Mobil, which planted its roots as an American standard nearly 150 years ago. Once the largest publicly traded company in the world, Exxon Mobil now ranks 10th in the world by market cap but remains the world’s largest energy company. Ethical and environmental concerns continue to cloud the company’s future, so you may need to ask yourself a few tough questions before learning how to buy Exxon stock.
Main Takeaways: How to Buy Exxon Stock
- Decide what place Exxon has in your portfolio. Do you plan to hold on to shares or sell soon? Your investing strategy will help you determine how much stock you should buy.
- Pick an online broker. There are many options for no-cost trading.
- Find your entry point. Find the best time for you to enter the market with Exxon.
- Make your trades. Follow the procedure of the broker you selected and purchase Exxon.
Exxon Mobil’s Company and Stock History
It’s been a long journey for the company now called ExxonMobil, one that began in the 1870s with John D. Rockefeller.
Brief Company History
Rockefeller and his business associates created the Standard Oil Company of Ohio in 1870. But the Sherman Antitrust Act forced the company to renegotiate its structure and the public turned against Rockefeller after Standard Oil was awarded the entire kerosene market in Asia.
In 1911, the U.S. Supreme Court decreed that Standard Oil would be broken up into 34 different firms. Among those 34 firms, 2 were the ancestors of Exxon and Mobil — Jersey Standard and Socony.
Fast forward: The company faced an existential crisis in 1989 when an oil tanker slammed into a reef in Alaska and poured more than 10 million gallons of oil into the Prince William Sound. The Exxon Valdez spill was one of the largest disasters in the history of the energy industry and cost the company over $500 million in fines.
In 1998, Exxon proposed a merger with Mobil, which was approved by both the European Commission and United States Federal Trade Commission (FTC) in 1999. The merger involved a more than $73 billion deal and Mobil stockholders received 1.3 shares of Exxon for every Mobile share owned.
Exxon Mobil Corporation announced two major oil discoveries and a gas discovery in the Gulf of Mexico after drilling the company's first post-moratorium deep-water exploration well.
XOM Stock History
ExxonMobil’s stock price has a complex history because it’s been known by many different names since its inception.
You could trace the stock price back to Standard Oil, which traded over the counter in the early 1900s before the forced breakup. Officially, Exxon had an IPO in 1978 and began trading on the New York Stock Exchange under the ticker symbol XOM.
Since going public, XOM has had three 2-for-1 stock splits, with the most recent on July 19, 2001. The split-adjusted all-time high price of $87.88 hit in mid-2014 and the stock has traded in a range of $70 to $85 for much of the last 2 years, except for during the COVID-19 pandemic, where it traded as low as $31.45.
One of the most appealing perks of XOM is its unstoppable dividend machine. The company has a 32-year history of raising dividends. Last year, the company posted a net income of $2.2 billion. Speculators
What to Consider Before You Buy XOM
ExxonMobil is one of the 30 Dow Jones Industrial Average components and currently has the 10th largest market cap in the entire world.
Among those 10 largest companies, only Berkshire Hathaway has a longer stock history than XOM. Still, despite ExxonMobil’s lengthy track record, an investment in XOM is by no means a slam dunk. Here are a few pros and cons of owning this stock.
Strengths of Exxon Stock
ExxonMobil has a prominent global presence and has operations on every continent. It also has some powerful friends. Former CEO Rex Tillerson was one of President Trump’s first presidential cabinet appointees. Ken Frazier, CEO of Merck and former member of the American Manufacturing Council, sits on the ExxonMobil Board of Directors, along with former Xerox CEO Ursula Burns and former MetLife CEO Steven Kandarian. In addition, ExxonMobil has a:
- History of increasing dividends: XOM increased its dividend consistently over the last 30 years. The company issued a $0.22 annual dividend in 1989, which has steadily risen over time. The most recent annual dividend came in at $3.48.
- Strong grip on oil industry: ExxonMobil is the largest publicly traded oil and gas company in the entire world and most developed countries depend heavily on its services.
Weaknesses of Exxon Stock
Fossil fuels are a political target in the wake of climate change issues and ExxonMobil is at the forefront of these headwinds. The company spends nearly $40 million a year to lobby against climate legislation, but public sentiment against the firm is has continued to increase.
The Exxon Valdez oil spill made national headlines, but smaller spills have also taken place in Brooklyn and Baton Rouge. ExxonMobil also came under fire for its Sakhalin-I pipeline project in Russia, which threatens the local gray whale population. In 2018, the Political Economy Research Institute named ExxonMobil the 16th largest water polluter in the world.
Steps to Buy Exxon Stock
Buying individual stocks can be risky, especially when you buy oil industry stocks with murky future prospects like XOM. Where will the company be in 20 years? What new legislation could impact its bottom line? Before you invest, weigh the pros and cons.
Here are the steps to take if you still want to add XOM stock to your portfolio.
- Map Out Your Investment Goals
The goal of any investment is to make money, but you’ll need to be more specific when you buy individual stock. How long do you plan to hold the shares? What would you like to spend the profits on? How would you react if the stock declined 25%? Before you buy any shares, put your investment goals down on paper.
Determine a plan and stick to it. - Determine the Capital You Can Risk
Individual stocks carry much more risk than ETFs or mutual funds. A good rule of thumb: Avoid letting any single stock take up more than 5% of your portfolio. Energy sector stocks can be volatile and watching your portfolio bounce around on a day-to-day basis could be a lot to handle.
Keep your position size small relative to the rest of your investments. - Pick a Free or Low-Cost Broker
XOM can be traded commission-free on trading apps like the ones below.
- Identify An Entry Point
Once you’ve funded a brokerage account for your XOM trade, you’ll need to locate an entry point to maximize gains. Technical indicators like moving averages and support/resistance lines are great tools to identify proper entry points.
Remember, every entry point will have a corresponding exit point where you sell your shares. Make sure you have an idea of the entry and exit points for your trade. - Execute Your Trade
Now that the math is out of the way, it’s time to buy XOM shares. Locate the shares on your brokerage and buy them with the capital you’ve put aside for trade.
If you want your order to execute right away, use a market order. If you want to wait until a specific price point is reached, a limit order will be more useful.
Best Online Stock Brokers
Does XOM Still Have a Place in Your Portfolio?
The oil and gas industry faces some serious political and environmental headwinds and it’s up to each individual investor to determine whether ExxonMobil will continue to bring home strong profits in the future.
If you’re looking for stability and income through dividends, the stock might be appealing to you. On the other hand, environmentally-conscious investors concerned with the company’s history of pollution might feel more comfortable avoiding ExxonMobil entirely.
Ready to start investing in oil stocks? Check out Benzinga's top picks for the best oil stocks, best energy stocks and the best online stock brokers.
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About Dan Schmidt
Dan Schmidt is a finance writer passionate about helping readers understand how assets and markets work. He has over six years of writing experience, focused on stocks. His work has been published by Vanguard, Capital One, PenFed Credit Union, MarketBeat, and Fora Financial. Dan lives in Bucks County, PA with his wife and enjoys summers at Citizens Bank Park cheering on the Phillies.