In response to a question from CNBC about whether he would keep the Exxon Mobil Corp. shares he receives as part of the recently announced merger agreement, Scott Sheffield, the co-Founder and Chief Executive of Pioneer Natural Resources Co., confidently stated, “‘Definitely I’m going to keep it. They have a great dividend, one of the highest in the S&P 500, so I’m very excited about that.'”
High Dividend Yield Excites Sheffield
Sheffield points to the enticing dividend yield as a significant factor in his decision. Under the terms of the $59.5 billion all-stock buyout agreement, each Pioneer share (PXD) will be exchanged for 2.3234 Exxon Mobil shares (XOM). With Sheffield directly and indirectly owning a total of 596,917 Pioneer shares, representing about 0.3% of the total shares outstanding, he is set to receive approximately 1.39 million Exxon shares.
Exxon recently paid a quarterly dividend of 91 cents per share on September 11, resulting in an annual dividend rate of $3.64 per share. The implied dividend yield, based on current stock prices, sits at 3.45%, ranking it as the 127th-highest dividend yield among S&P 500 index members. Comparatively, the Energy Select Sector SPDR ETF boasts a slightly higher dividend yield of 3.48%, with the S&P 500 offering an implied yield of 1.60%.
Potential Annual Dividend
With the 1.39 million Exxon shares Sheffield is slated to receive, he anticipates a yearly dividend payout of approximately $5.05 million. This attractive dividend prospect reaffirms his decision to retain the shares.
Although Sheffield is still planning to retire at the end of this year, he has confirmed that he will continue to contribute as a director once the deal is finalized.
While Pioneer shares experienced a 1.1% gain, Exxon’s stock saw a 4.5% decline in midday trading.
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