Exxon Mobil outpaces S&P 500 over five years following 2020 Dow removal
CEO Darren Woods’ strategic overhaul and record production have helped the energy giant turn a $1,000 investment into nearly $3,000 since its 2020 exit from the Dow.
Exxon Mobil has delivered returns nearly double that of the S&P 500 over the past five years, significantly outperforming the broader market despite its removal from the Dow Jones Industrial Average in August 2020. According to data from Yahoo Finance, a $1,000 investment in the company over this period would have grown to nearly $3,000, compared to a 79.15% return for the index based on split- and dividend-adjusted prices.
The turnaround follows a transformation strategy initiated by CEO Darren Woods in 2018, which prioritised cost cuts and capital discipline. The company benefited from record profits in 2022 driven by the energy crisis following Russia’s invasion of Ukraine, alongside increased production from the Permian Basin and Guyana. This momentum was further bolstered by the acquisition of Pioneer Natural Resources in May 2024, which expanded its footprint in key US shale regions.
By 2025, Exxon reported record production of 4.7 million oil-equivalent barrels per day, with advantaged assets comprising 59% of that output. The company has also maintained a 43-year dividend growth streak, with quarterly payouts increasing from approximately $0.69 in 2015 to $1.03 currently. Additionally, Exxon has announced a $20 billion share buyback programme, reinforcing its commitment to returning capital to shareholders.
However, the long-term picture presents a more mixed narrative for patient investors. Over a ten-year horizon starting from June 2016, Exxon lagged the S&P 500 by nearly 100 percentage points, with the index returning 258.22% compared to the company’s lower cumulative return. This period included the brutal collapse of crude demand during the pandemic, where West Texas Intermediate briefly cratered to $16.55 in April 2020.
Current valuation metrics show a forward price-to-earnings ratio of 15 times and a dividend yield of 2.73%. Despite the strong five-year performance, near-term risks remain evident, with free cash flow falling by 61.74% year-on-year in the first quarter and an effective tax rate of 40%. WTI crude oil prices are currently at $95.96, sitting in the 82nd percentile of its 12-month range, suggesting that the stock’s appeal is closely tied to sustained energy prices.
