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Friday, 09/26/2003

Supply and Demand
By Nich Sheldon
XOM - Exxon Mobile Corp.

Company Description

ExxonMobil is the industry leader in each of its core businesses (Technology, Downstream - Refining & Marketing, Upstream - Exploration & Production and Chemicals) and has an unmatched array of proprietary technologies aimed at increasing the productivity of its assets and employees. The company conducts business in almost 200 countries and territories around the globe and has established a new definition for world-class scale and efficiency.

[Source: Company Press Release]

Reasons to Invest:

This week's Drip of the Week is Exxon Mobile Corp (NYSE:XOM). This DRIP has been on our radar for the past few months, and at its current level, we just could not wait another week to write it up. While Exxon may be ranked 15th out of 99 in price performance for its sector, we can't help but notice that it remains one of the most consistent performers in its index.

Let's face the facts here; gas and oil are always going to be in demand. Seriously, no matter the cost of a gallon of gasoline, people are still going to fill up their tanks. We need our cars to get from point A to point B. The airline industry is always going to need gas to fly its passengers from one state to the next. The government will always need fuel for its jets, tanks and helicopters, etc. I don't know about you, but I haven't heard of any alternative fuels for planes, tanks and helicopters? With that said, the need for transportation - especially in an improving economy, should help to keep oil in demand for quite some time. Who better to supply that oil than Exxon Mobile Corp?

Keeping this in mind, the energy sector should continue to fair well on Wall Street, increasing the price of XOM and the value of your DRIP Portfolio. Speaking of your portfolio, XOM offers a 2.69 percent dividend yield. Exxon's quarterly dividend is $0.25 per share, or $1.00 per share annually. Their last dividend was distributed on September 10th, so if you are interested in XOM, there is plenty of time to cash in on the fourth quarter dividend of $0.25 this December.

Also noteworthy, is the fact that over the first two quarters XOM's revenues rose 28% to $120.95 billion. Exxon's net income from continued operations (before an accounting change) total $10.66 billion, which is up from $4.69 billion. The company noted that these results reflect higher realizations and higher margins. Either way, a 28% increase in revenue and more than 50% increase in net income is an awesome feat for the energy giant, as they have many competitors in their sector.

Over the next year, Exxon Mobile is estimating a dividend percentage growth rate of 1.10. They see 2.94 percent dividend growth over the next three years, and 2.59 percent over the next five years.

Currently, XOM is valued at $36.78, and we suspect that over the next year we could see the stock as high as $40-$41. If the 41 level was reached, this would be a 11% gain over the next year, returning $4.22 per share.

Before we dim XOM from the DRIP of the Week spotlight, I would like to share a little information about their DRIP program with you. Should you choose to add XOM to your portfolio, the minimum initial investment is $250. This is pretty low considering most of the DRIPs we have spotlighted cost $500-$1,000 to initiate a DRIP plan. You only need one share to qualify, and they do offer an auto-reinvestment plan. Additionally, they do not charge an enrollment fee or purchase fees. On top of that, XOM offers an IRA option in its DRIP plan, as well as a Roth IRA.

Until Next Week,
Nich Sheldon

***************************************************************** EDITORS NOTE:
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DRIP Information:
Shares to Qualify = 1
Auto-reinvestment = Yes
Accept Foreign Accounts: Yes
Temper Enrollment:  Yes

Min/Max Investment = $50-$200,000/year

Reinvestment Fees - 
Dividend investment fees: None
Cash investment fees: None
Auto reinvestment fees: None

Transfer Agent:

Corporate Headquarters:
5959 Las Colinas Boulevard
Irving, TX 75039
Phone: (972) 444-1000
Fax: (972) 444-1348


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