Updated 3/6/25
Chevron Corporation (CVX) is one of the largest integrated energy companies in the world, with operations spanning oil exploration, production, refining, and marketing. It has been a dominant force in the energy sector for decades, consistently navigating the ups and downs of the market. For dividend investors, Chevron has long been a go-to stock, thanks to its commitment to returning cash to shareholders.
With its reputation for steady dividend payments and a strong presence in the oil and gas industry, Chevron continues to be a key holding for income-focused investors. But is its dividend as attractive as it looks? Let’s take a closer look.
Key Dividend Metrics
💰 Dividend Yield: 4.47% (forward)
📈 5-Year Average Dividend Yield: 4.43%
💵 Annual Dividend: $6.84 per share
🎯 Payout Ratio: 67.08%
📅 Next Dividend Date: March 10, 2025
⏳ Ex-Dividend Date: February 14, 2025
🛠️ Dividend Growth Streak: 37 consecutive years
Dividend Overview
Chevron has built a strong reputation as a reliable dividend payer, and right now, its forward dividend yield of 4.47% is slightly above its five-year average. That’s a good sign for income-focused investors who want to maximize their returns. With an annual payout of $6.84 per share, Chevron delivers a steady stream of cash to shareholders.
The company’s payout ratio of 67.08% is worth keeping an eye on. While this level is sustainable, it means a significant portion of earnings is going toward dividends. That’s not necessarily a bad thing, but in an industry as cyclical as oil and gas, it’s always good to see a buffer in case of a downturn.
Dividend Growth and Safety
One of the most impressive aspects of Chevron’s dividend is its consistency. The company has increased its payout for 37 consecutive years, proving its commitment to rewarding shareholders. That level of consistency is rare, especially in a sector as volatile as energy.
But a growing dividend is only as good as the company’s ability to sustain it. So, let’s look at the numbers:
- Earnings are up, with quarterly growth of 43.4% year-over-year.
- Operating cash flow stands at $31.49 billion, giving Chevron plenty of room to cover dividends.
- Debt remains manageable, with a debt-to-equity ratio of 19.33%.
With these figures in mind, Chevron’s dividend looks well-supported. Even if oil prices fluctuate, the company has a strong enough balance sheet to keep paying shareholders.
Chart Analysis
Price Action and Moving Averages
Chevron’s stock has been trading in a choppy range, with price swings evident over the past year. The 50-day simple moving average (SMA) is currently below the 200-day SMA, indicating a potential bearish trend in the medium term. However, the stock has made several attempts to break above the 200-day SMA, showing some resilience.
Recently, the price dipped below both moving averages but is now attempting to reclaim the 200-day level. This suggests a key decision point for the stock—either it pushes higher and builds momentum or it faces resistance and turns lower again.
Volume and Market Participation
Trading volume has remained relatively stable, but there are noticeable spikes, particularly in October and again in early December. These higher-volume days indicate strong buying or selling activity, typically around key support or resistance levels.
Lately, volume hasn’t shown any major surges, suggesting that the stock isn’t experiencing aggressive accumulation or distribution. Investors are likely waiting for a clearer signal before making bigger moves.
Relative Strength Index (RSI)
The RSI is hovering around neutral levels, neither overbought nor oversold. This signals that the stock isn’t in extreme conditions where a strong move in either direction is imminent. If the RSI begins to rise above 70, it could indicate that the stock is becoming overextended, while a drop below 30 would suggest overselling pressure.
Recent Price Candles
Looking at the last few daily candles, there is a mix of buying and selling pressure. A couple of the recent candles show long wicks, which typically means there was some indecision in the market. When a stock wicks higher but closes lower, it suggests sellers stepped in at higher levels, pushing the price back down. Conversely, a long lower wick could indicate buyers defending a key level.
These signals suggest that Chevron’s stock is in a consolidation phase, waiting for a catalyst to determine its next directional move.
Analyst Ratings
📊 Chevron Corporation (CVX) has recently been the subject of various analyst evaluations, reflecting a mix of optimism and caution about the company’s future performance.
💡 The consensus among investment analysts currently stands at a moderate buy, with an average 12-month price target of $174.13. This suggests a potential upside from the current stock price, indicating that most analysts see room for growth, though some remain cautious.
🔼 Upgrades
In late 2024, Citigroup analysts upgraded Chevron’s stock to a buy rating, raising the price target from $145 to $185. This bullish stance was driven by the company’s exploration activities in Namibia, which analysts see as a potential game-changer. The prospects of new energy reserves and Chevron’s ability to capitalize on these opportunities were key factors in the upgrade. If successful, these projects could add significant long-term value, justifying the higher price target.
🔽 Downgrades
Not all analysts share the same enthusiasm. In December 2023, Exane BNP Paribas downgraded Chevron from neutral to underperform, setting a price target of $190. The reasoning behind this downgrade was tied to concerns over valuation and global oil demand. With uncertainties around economic conditions, there was speculation that demand for crude could slow, impacting Chevron’s profitability.
🏛️ Meanwhile, in early 2025, Barclays adjusted its price target slightly downward, moving it from $174 to $171 while maintaining an overweight rating. This minor revision reflected concerns about fluctuating oil prices and operational challenges, though Barclays still sees long-term potential in the stock.
🔄 These mixed opinions highlight the balance of opportunities and risks that Chevron faces. While some see upside due to exploration and expansion, others remain cautious about macroeconomic factors and valuation concerns. Investors will need to weigh both perspectives when evaluating the stock’s potential.
Earning Report Summary
Chevron’s latest earnings report showed a mix of positives and challenges, reflecting both strong revenue growth and some headwinds in certain segments. The company posted earnings of $3.2 billion for the fourth quarter of 2024, translating to $1.84 per share. That’s up from $2.3 billion, or $1.22 per share, in the same quarter last year. However, these numbers include some hefty charges—$715 million in severance costs and another $400 million in impairments—which had an impact on overall results.
Looking at the adjusted earnings, which strip out one-time items, Chevron reported $3.6 billion, or $2.06 per share. That’s a notable drop from the $6.5 billion, or $3.45 per share, in the fourth quarter of 2023. The decline reflects a few factors, including lower margins in refining and increased operating expenses.
On the revenue side, things looked strong. Chevron pulled in $52.2 billion for the quarter, well above expectations of $46.7 billion. That’s a solid 10.7% increase from a year ago, showing that despite some operational challenges, the company is still generating substantial cash flow.
Production numbers were steady, though slightly lower than the same period last year. The company produced 3.35 million barrels of oil equivalent per day, down a bit from 3.39 million barrels per day in Q4 of 2023. But for the full year, production was actually up 7%, thanks in large part to a strong performance in the Permian Basin, where output jumped 18%.
On the upstream side of the business, the U.S. segment turned in a solid performance, swinging to a profit of $1.42 billion compared to a loss of $1.35 billion in the same quarter last year. That turnaround was helped by fewer asset-related charges and stronger operational efficiency. Meanwhile, the international upstream segment saw a slight dip, bringing in $2.88 billion versus $2.93 billion last year, largely due to higher costs and lower realized prices.
Downstream operations didn’t fare as well. In the U.S., the segment posted a loss of $348 million, compared to a profit of $470 million a year ago. Lower refining margins and increased expenses weighed on results. Internationally, the downstream business also struggled, bringing in just $100 million versus $677 million last year.
Cash flow for the year came in at $31.5 billion, down from $35.6 billion in 2023. Even so, Chevron continued rewarding shareholders, returning a record $27 billion in cash—$11.8 billion through dividends and $15.2 billion via share buybacks.
To top it off, the company boosted its quarterly dividend by 5%, bringing it up to $1.71 per share. The new dividend will be paid out on March 10, 2025, to shareholders of record as of February 14, 2025. That’s a reassuring sign for income investors, even as Chevron navigates the ups and downs of the energy market.
Financial Health and Stability
Chevron’s balance sheet is in solid shape, and that’s good news for dividend investors.
- The company holds $6.78 billion in cash, providing liquidity for ongoing operations and shareholder returns.
- Total debt sits at $29.61 billion, which is reasonable given the scale of the business.
- Return on equity is 11.27%, showing that Chevron is generating a solid return for shareholders.
- Profit margins stand at 9.03%, and operating margins are at 11.39%, reflecting stable operations.
While no company is immune to market fluctuations, Chevron’s financial health suggests it’s well-positioned to continue delivering strong dividends in the years ahead.
Valuation and Stock Performance
At $152.95 per share, Chevron is trading at a reasonable valuation.
- Trailing price-to-earnings (P/E) ratio: 15.74
- Forward P/E ratio: 13.55, indicating expected earnings growth
- Price-to-book ratio: 1.77, suggesting a fair valuation
- Enterprise value to EBITDA: 6.42, a solid metric for a large energy company
Looking at its price history, Chevron has moved between $135.37 and $167.11 over the past year. Right now, it’s sitting in the middle of that range. Institutional investors hold about 70.18% of the stock, which signals confidence in the company’s long-term potential.
Chevron’s stock performance has been relatively stable, and with oil prices remaining a key factor, it will be interesting to see how the company navigates future market conditions.
Risks and Considerations
While Chevron has strong financials and a solid dividend track record, there are always risks to consider:
- Oil price volatility: Chevron’s earnings are closely tied to crude oil prices. A major downturn could impact cash flow and dividend stability.
- Regulatory and environmental challenges: The energy sector faces increasing pressure from regulators and environmental policies.
- Industry cycles: The oil and gas sector is known for its ups and downs. While Chevron has managed through past downturns, investors should always be prepared for fluctuations.
- Payout ratio: At 67.08%, the dividend is well-supported, but it doesn’t leave much room for flexibility if earnings take a hit.
For long-term investors, these risks don’t necessarily mean Chevron is a bad investment—it just means that understanding market conditions and industry cycles is essential.
Final Thoughts
Chevron remains one of the most attractive dividend stocks in the energy sector. With a strong history of dividend growth, solid financials, and a commitment to returning cash to shareholders, it’s easy to see why income investors continue to hold this stock.
While there are risks associated with any energy company, Chevron’s ability to generate strong cash flow and maintain a stable payout makes it a compelling choice for dividend investors looking for reliable income.
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