Exxon Increasing Dividend in Move to Boost Confidence
Just two days after taking a massive charge against its earnings to cover costs of the Alaskan oil spill cleanup, Exxon Corp. said Wednesday that it planned to raise its dividend.
The New York-based oil company said it will raise the quarterly payout to stockholders to 60 cents a share from 55 cents. Exxon’s new dividend will be paid Sept. 11 to shareholders of record Aug. 14.
On Monday, Exxon reported that it took an $850-million charge in the second quarter to cover the cost of cleaning up the oil spilled when the tanker Exxon Valdez ran aground in Alaska in March.
The charge nearly wiped out Exxon’s earnings in the quarter ended June 30, which fell to $160 million from $1.2 billion in the year-ago period. In recent years, Exxon has consistently earned more than $1 billion each quarter.
Analysts said the dividend raise was designed to shore up investor confidence and support Exxon’s stock price after the charge for cleaning up the 11-million gallon spill.
The $850 million, plus an additional $400 million of insurance proceeds that Exxon expects to have available, will be used to pay for the thousands of workers, hundreds of vessels and other equipment needed to clean the soiled beaches of Prince William Sound, where the spill occurred, and other areas.
The figures also cover payments to fisherman, tour promoters and other businesses that suffered because of the spill.
The higher dividend rate will cost Exxon an additional $63 million each quarter, bringing total quarterly dividend payments to $756 million, according to Exxon spokesman William Smith.
“The corporation’s business results and financial strength support increasing the dividend at this time,” Smith said. The company must consider needs of its stockholders, he added.
Exxon last raised its dividend 5 cents a share in June, 1988.
Separately, Exxon Shipping Co. agreed with the state of California to post a $10-million bond before bringing its crippled tanker Exxon Valdez into the Port of San Diego for repairs, sources familiar with the agreement said.
Exxon shares closed up 50 cents at $44.50 in active New York Stock Exchange trading.