Exxon Mobil Corp. increased its quarterly dividend by 2 cents to 75 cents a share, a day after losing its AAA credit rating.
Exxon was expected to raise its dividend to 76 cents, the average of forecasts compiled by Bloomberg. The company has regularly announced an increase in dividend each April. This is the smallest increase since 2011. The largest U.S. energy company is expected to report quarterly earnings on Friday.
Standard & Poor’s on Tuesday stripped Exxon of its highest AAA measure of credit-worthiness, cutting it to AA+, the same as the U.S. government. It’s a defeat for Exxon, which sought to retain the rating after S&P placed it on notice in February. Before the downgrade, Exxon shared the distinction with just two other companies: Johnson & Johnson and Microsoft Corp.
S&P questioned Exxon’s decision to spend $54 billion on stock buybacks since 2012 even as its debt load swelled. Exxon’s preference for returning cash to shareholders may be hurting its ability to stockpile cash and pay down debt, the credit rating company said. Exxon is scheduled to release first-quarter earnings on Friday before the start of trading.
"The company’s debt level has more than doubled in recent years, reflecting high capital spending on major projects in a high commodity price environment and dividends and share repurchases that substantially exceeded internally generated cash flow," S&P wrote in the note.
"Nothing has changed in terms of the company’s financial philosophy or prudent management of its balance sheet," Scott Silvestri, a company spokesman, said Tuesday in an e-mail. "Exxon Mobil places a high value on its strong credit position and continues to be focused on creating long-term shareholder value despite near-term market volatility.”