Dividend Aristocrats In Focus: Chevron Company

Up to date on February twentieth, 2025 by Felix Martinez

Chevron Company (CVX) is without doubt one of the world’s largest and most well-known power shares. It is usually one of many power sector’s most steady dividend progress corporations, having grown its dividend for 38 consecutive years.

In consequence, Chevron is a member of the unique Dividend Aristocrats – a gaggle of 69 elite dividend shares with 25+ years of consecutive dividend will increase.

We imagine the Dividend Aristocrats are among the highest-quality dividend shares in your complete inventory market. With this in thoughts, we created a full listing of all 69 Dividend Aristocrats, together with essential monetary metrics reminiscent of dividend yields and P/E ratios.

You’ll be able to obtain a duplicate of our full Dividend Aristocrats listing by clicking on the hyperlink beneath:

Disclaimer: Certain Dividend is just not affiliated with S&P International in any manner. S&P International owns and maintains The Dividend Aristocrats Index. The knowledge on this article and downloadable spreadsheet relies on Certain Dividend’s personal evaluate, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person buyers higher perceive this ETF and the index upon which it’s primarily based. Not one of the info on this article or spreadsheet is official knowledge from S&P International. Seek the advice of S&P International for official info.

As a result of trade’s reliance on excessive commodity costs for profitability, solely two oil shares are on the listing of Dividend Aristocrats: Chevron and Exxon Mobil (XOM).

Chevron’s dividend consistency and stability assist it stand out within the in any other case risky power trade. This text will analyze Chevron’s intermediate-term funding prospects.

Enterprise Overview

Chevron is certainly one of 6 built-in oil and fuel super-majors, together with:

• BP (BP)
• Eni SpA (E)
• TotalEnergies (TTE)
• Exxon Mobil (XOM)
• Shell (SHEL)

Like the opposite built-in supermajors, Chevron engages in upstream oil and fuel manufacturing and downstream refining companies. In 2023, Chevron generated 74% of its earnings from its upstream section. Subsequently, it’s extremely delicate to the underlying commodity value.

International oil demand has continued to extend within the years because the coronavirus pandemic steadily. Individually, oil and fuel costs have been elevated because of the struggle in Ukraine and ensuing sanctions on Russia. Earlier than the sanctions, Russia was producing about 10% of world oil output and one-third of pure fuel consumed in Europe.

The profit from these exceptionally favorable situations was evident in Chevron’s efficiency in 2022, though situations softened in 2023 and 2024 as oil and fuel costs moderated off their peaks.

Nonetheless, Chevron is posting robust monetary outcomes. On the finish of January, Chevron reported (1/31/25) earnings for the fourth quarter and full 12 months. The corporate fourth-quarter 2024 earnings of $3.2 billion ($1.84 per share), up from $2.3 billion in 2023, with adjusted earnings at $3.6 billion. The corporate returned a file $27 billion to shareholders, together with $15.2 billion in buybacks and $11.8 billion in dividends. The board accredited a 5% dividend enhance to $1.71 per share. Full-year earnings totaled $17.7 billion, although decrease refining margins and asset retirement prices impacted money circulate.

Manufacturing hit file ranges, with international output up 7% and U.S. manufacturing rising 19%, pushed by progress within the Permian Basin and PDC Vitality integration. Key initiatives included the Anchor deepwater growth within the Gulf of Mexico and the Future Development Undertaking in Kazakhstan. Chevron additionally divested property in Canada, Alaska, and the Republic of Congo whereas advancing its $53 billion acquisition of Hess. The corporate goals for $2–3 billion in price financial savings by 2026.

Chevron expanded low-carbon initiatives, chopping emissions by 700,000 metric tons and growing carbon storage efforts. It upgraded refining capabilities in Pasadena, Texas, and secured new exploration acreage worldwide. The corporate additionally launched a $500 million Future Vitality Fund III to put money into clear power applied sciences whereas sustaining its deal with capital self-discipline and long-term progress.

Development Prospects

Chevron is without doubt one of the largest publicly traded power firms on the planet and stands to profit tremendously from elevated costs of oil and fuel.

Chevron invested closely in progress initiatives for years however did not develop its output for a complete decade, as oil initiatives take a number of years to start out bearing fruit. Nevertheless, Chevron is now within the optimistic section of its investing cycle.

Supply: Investor Presentation

As well as, because of the high-grading of its asset portfolio, Chevron can fund its dividend even at an oil value of $40.

One other long-term progress catalyst is Chevron’s main acquisition. On October twenty third, 2023, Chevron agreed to Purchase Hess (HES) for $53 billion in an all-stock deal. Due to this deal, Chevron will buy the extremely worthwhile Stabroek block in Guyana and Bakken property, enormously enhancing its manufacturing and free money circulate.

However, given the almost all-time excessive earnings-per-share anticipated this 12 months, we count on an -5 % common annual lower over the following 5 years.

Aggressive Benefits & Recession Efficiency

Chevron’s aggressive benefit within the extremely cyclical power sector comes primarily from its dimension and monetary energy. The corporate’s operational experience allowed it to navigate the 2020 coronavirus pandemic efficiently.

As a commodity producer, Chevron is susceptible to any oil value downturn, significantly given that it’s the most leveraged oil main to the oil value. Nevertheless, because of its robust steadiness sheet, the corporate is more likely to endure the following downturn, identical to it has completed in all of the earlier downturns.

Chevron’s aggressive cost-cutting efforts have helped the corporate develop into extra environment friendly. Chevron has continued to scale back drilling prices, considerably lowering its break-even expense.

Chevron stacks up nicely amongst its friends within the power sector. Nevertheless, the corporate is actually not essentially the most recession-resistant Dividend Aristocrat, as evidenced by its efficiency through the 2007-2009 monetary disaster:

• 2007 adjusted earnings-per-share: $8.77
• 2008 adjusted earnings-per-share: $11.67 (33% enhance)
• 2009 adjusted earnings-per-share: $5.24 (-55% decline)
• 2010 adjusted earnings-per-share: $9.48 (81% enhance)

Chevron’s adjusted earnings per share declined by greater than 50% through the 2007-2009 monetary disaster, however the firm managed to stay worthwhile throughout a bear market that drove a lot of its rivals out of enterprise.

This allowed Chevron to proceed elevating its dividend fee all through the Nice Recession. Chevron’s dividend security is way above the typical firm within the power sector.

Valuation & Anticipated Whole Returns

Chevron’s anticipated complete returns are harder to evaluate than these of many different corporations. That is primarily because of the firm’s extremely risky outcomes, which end result from the dramatic swings in oil and fuel costs.

With a share value close to $158, the price-to-earnings ratio presently sits 14.8 occasions primarily based on 2025 anticipated earnings of $10.70 per share.

If the inventory reverted to our truthful worth estimate of 14 occasions earnings, this is able to indicate a fractional valuation headwind over the following 5 years.

Furthermore, the inventory provides a 4.4% dividend yield. Nevertheless, the valuation tailwind and the dividend are more likely to be offset by the anticipated 5% common annual decline in earnings per share.

General, the inventory might generate a -0.5% common annual return over the following 5 years off its almost all-time excessive present inventory value.

Closing Ideas

Chevron is without doubt one of the uncommon oil and fuel corporations that was capable of navigate by means of the Nice Recession of 2007-2009, the oil downturn of 2014-2016, and the COVID-19 pandemic with out chopping its dividend.

Chevron’s decrease price construction permits it to deal with a a lot decrease common oil value. Moreover, new initiatives within the U.S. and worldwide markets will assist the corporate proceed to develop.

However, as we’re nearing the height of the oil trade’s cycle, which is notorious for its dramatic swings, Chevron ought to in all probability be prevented round its present inventory value.

Moreover, the next Certain Dividend databases comprise essentially the most dependable dividend growers in our funding universe:

In the event you’re searching for shares with distinctive dividend traits, think about the next Certain Dividend databases:

The main home inventory market indices are one other strong useful resource for locating funding concepts. Certain Dividend compiles the next inventory market databases and updates them month-to-month: