ExxonMobil (XOM 0.38%) has a yield of 4.3%, while Royal Dutch Shell's (RDS.B) is 5.8%. Is that enough information to pick between these two integrated energy giants? The answer is no, but the details are a little subtle. Here's how these two oil and natural gas giants are similar and how they are different. It's the little differences that will push you toward one or the other.

Doing roughly the same job

Exxon and Shell both operate upstream (oil and natural gas drilling), midstream (pipeline), and downstream (refining and chemicals) business. This vertical integration provides some balance to their revenues and earnings because their downstream operations will usually get a boost from low energy prices, right when the upstream is suffering. It's not a perfect offset -- oil prices are still the most dominant driver of financial results for both companies. However, this diversification does provide more balance than a pure driller would offer.

An offshore drilling rig

Image source: Getty Images.

Both companies are very large as well. Exxon is the bigger company, with a market cap of roughly $320 billion. However, Shell isn't far behind at $280 billion. Although size alone doesn't make a company good or bad, it does provide these two with the scale to take on huge projects with which smaller companies might struggle. That scale, meanwhile, has been built over a very long time, with both Exxon and Shell having been in existence in some form for more than 100 years. That's notable because both have managed through many ups and downs in the historically volatile oil industry.

These two industry giants also have fairly strong balance sheets. That said, they take notably different approaches to managing this financial statement. Specifically, Exxon tends to make modest use of long-term debt, which accounts for only about 10% of its capital structure today. Shell's long-term debt is a little under 30% of its capital structure. That gives Exxon more flexibility to add long-term debt during an industry downturn to support its capital investing plans and dividends. However, Shell tends to carry a lot more cash on its balance sheet ($21 billion) than Exxon ($4.5 billion). Taking that into consideration, Shell's balance sheet looks much stronger.   

The big differences

That said, the differing balance sheet approaches were on clear display during the deep oil downturn that started in mid-2014. Shell chose to stop raising its dividend during that rough patch and has yet to start again. Exxon increased its dividend right through the downturn and now has boosted it for 36 consecutive years. It stands atop the integrated energy peer group when it comes to consistently rewarding investors with regular dividend hikes. If consistent dividend growth is important to you, then Exxon is the easy choice here. Its conservative financial policies are why it's able to keep upping its payout even during the hard times.   

XOM Dividend Chart

XOM dividend. Data by YCharts.

Exxon, however, is currently in the midst of a massive investment cycle. This push was spurred by a declining trend in the company's production metrics. It looks like the company has turned the corner and production will start growing again, or at least remain stable. But the bigger takeaway when comparing Exxon to Shell here is that Exxon is basically doubling down on the oil and natural gas space.

By comparison, Shell has been actively looking to spread its bets into new areas. It has purposefully taken a broad view of the energy industry, so that it includes electricity in its future plans. Specifically, it has been dabbling in the renewable power space. This is still a very small part of Shell's business and it isn't the only oil giant pushing into new areas. But it is a major point of differentiation from Exxon. If you are looking for a broadly diversified energy company, then Shell's move to extend its reach into electric markets will clearly be more appealing. This nascent effort, however, potentially increases the chance of a misstep, since electricity isn't the company's main business.

You could probably flip a coin, but...

When you step back from Exxon and Shell and look at the big picture, they are both very good companies. Each is financially strong and providing investors with a material return on their investment via dividends. Oil and natural gas will also be the main factor driving each company's business for many years to come. Neither is a bad option.

However, there are nuances that might matter to some investors. The differing approaches to the balance sheet, disparate dividend histories, and Shell's effort to expand into the electric sector (or Exxon's decision to stick to oil and gas) might tip the scale one way or the other for some investors. In this instance, the most conservative out there will probably prefer Exxon. Income investors looking to maximize the dividends they generate from their portfolio, though, wouldn't be making a bad choice if they went with Shell.