Please ensure Javascript is enabled for purposes of website accessibility

You Own ExxonMobil Stock and Probably Don’t Even Know It

By Matthew DiLallo - Sep 23, 2013 at 4:00PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

As America’s largest oil company, ExxonMobil has been attracting investors wanting a share of its profits for decades. At the same time, it has been attracting another set of investors that don’t even know they own a piece of the oil giant.

Photo credit: The Motley Fool

ExxonMobil (XOM 0.89%) has about 4.4 billion shares of stock. Chances are you may own one or more of those shares and don't even know it. That's because from mutual funds to ETFs, ExxonMobil is one widely held stock. Let's take a closer look at places that Exxon's stock might be hiding. 

Big Oil is a Big Piece of the Stock Market
When we think of the stock market in general terms the S&P 500 is probably the most commonly used gauge for the market. For many investors, beating the market means beating the S&P 500. However, for many investors simply meeting the market's gains is enough, which is why so many have turned to owning a broad market index.

By simply owning an ETF or Mutual fund that mimics the S&P 500, investors are also indirectly investing in Exxon's stock. For example, one common ETF, the SPDR S&P 500 ETF Trust (SPY -0.66%), has about 2.66% of its assets invested in ExxonMobil stock. In fact, when combined with another big oil company, Chevron (CVX 0.80%), more than 4% of the index's total is invested in just these two stocks. So, not only do investors indirectly own a piece of big oil, it's a fairly outsized piece when considering that there are 500 stocks in that index.

Mutual Funds Love ExxonMobil
Chances are that even investors that have shied away from broad market exposure own a piece of Exxon. According to recent data, there are 2,168 institutions holding Exxon's stock while 2,849 mutual funds hold shares. Exxon is especially widely held by funds focused on value and income. That makes sense given that Exxon's stock trades at about 11 times earnings while also offering a 2.85% dividend yield. It's a lot cheaper than the S&P 500, which trades at about 18 times earnings and currently yields just over 2%. On the other hand, Exxon actually trades at a bit of a premium to big oil peer Chevron's 10 times earnings and 3.22% yield. One reason for that is because as the biggest of big oil, investors are willing to pay a slight premium to own its stock. The bottom line is that when a mutual fund is seeking big oil exposure Exxon is the go-to stock. 

Exxon's stock is also hiding in other places that many investors might overlook. For example, even a variable annuity like the TIAA-CREF Stock Account owns a fairly big chunk of Exxon's stock at over 1% of its total holdings. While that might not seem like a large percentage, it is worth nearly $1.5 billion. Exxon's predictable growth and large size make it a logical choice for the core growth fund's income focus.

Final Thoughts
Whether it's through an ETF, mutual fund, annuity or even a pension plan, there is a good chance that ExxonMobil is fueling the retirement of most of those reading this article. It's actually not a bad stock to be invested in as high oil prices will continue to fuel its stock price and dividend for years to come. While investors certainly could earn higher returns in a more growth focused oil stock, there's something to be said about owning a stock as secure as Exxon. Because let's face it, everyone else does. 

Looking to Profit from Oil but Want to Ditch Exxon?


Fool contributor Matt DiLallo has no position in any stocks mentioned. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Exxon Mobil Corporation Stock Quote
Exxon Mobil Corporation
XOM
$92.27 (0.89%) $0.81
SPDR S&P 500 ETF Trust Stock Quote
SPDR S&P 500 ETF Trust
SPY
$426.85 (-0.66%) $-2.85
Chevron Corporation Stock Quote
Chevron Corporation
CVX
$157.66 (0.80%) $1.25

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/17/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.