In addition to Royal Dutch Shell (NYSE: RDS-A), which is not one of the 93 holdings held by IYE, Exxon Mobil (NYSE: XOM, Chevron (NYSE: CVX) and ConocoPhillips (NYSE: COP) are among the oil majors that have announced $40 billion in spending reductions. Those stocks combine for almost 42% of IYE’s weight.
Exxon slashed its share repurchase plan by 50% to conserve capital while Chevron suspended 2015 buyback efforts. Fortunately, neither company has announced negative dividend actions, something the options market has speculated is on the horizon for some oil majors. [Energy ETFs Could Have Dividend Issues]
Exxon, the largest U.S. oil company and IYE’s largest holding, has a dividend increase streak of 31 years. Exxon and Chevron are members of the S&P Dividend Aristocrats Index, which requires 25 consecutive years of increased dividends for inclusion.
Despite slumping oil prices, energy ETFs, including IYE, face valuation headwinds. For example, IYE’s rival, the Energy Select Sector SPDR (NYSEArca: XLE), trades at the highest multiple of the nine sector SPDR ETFs while the energy sector is the most richly valued of the 10 sectors tracked within the S&P 500.
iShares U.S. Energy ETF
