Business

Exxon expected to bow to shareholder pressure for higher dividend

HOUSTON — Exxon Mobil is expected next week to unveil a higher-than-average dividend increase, pleasing investors who have long urged the company to bring its cash distribution closer to its oil-industry competitors.

Some analysts forecast Exxon will lift its quarterly dividend, currently at 47 cents per share, by between 10 percent and 33 percent. That is a significant jump from the average 6.5 percent increase over the last decade.

“Exxon Mobil is expected to react to increasing pressure from shareholders in recent years to offer a more generous dividend,” Alan Good, an analyst at Morningstar, said.

A sharp spike is expected after CEO Rex Tillerson told analysts at the company’s annual meeting in March that Exxon was aware its dividend yield was low compared to its rivals. He added the oil giant was evaluating a possible increase by the end of the second quarter, when the company expects to finish repurchasing the shares issued to acquire natural-gas producer XTO Energy in 2010.

Exxon, the world’s largest publicly owned oil company, also typically announces its annual dividend increase the last week of April.

Exxon is reviewing whether higher oil prices anticipated in the future will be sufficient to allow for a bigger dividend, Tillerson added.

Chevron, Royal Dutch Shell and BP all offer a higher dividend yield than Exxon, causing some investors to question Exxon about its preference to spend more in share buybacks than dividends.

A sharp dividend increase would be a departure for Exxon, which for three decades has preferred to offer conservative, but constant dividends, despite the ups and downs of the energy markets.

Analysts do not expect Exxon to lift its dividend to a level that will close the gap with rivals, but they do forecast a substantial increment that will soothe investors’ woes.

Exxon is likely to take “an outright positive action in response to shareholder wishes,” Deutsche Bank analyst Paul Sankey said in a note to clients.

Exxon Mobil declined comment.