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  • Writer's pictureAlex Artenie

I bought CVX this month. Here is my Chevron Stock Dividend Analysis

Updated: May 28

Chevron (CVX) Stock Analysis

Chevron (CVX) has attracted considerable attention recently. Investor interest has increased due to its 8% dividend increase, particularly in light of its strong financial performance in 2023. Chevron is positioned as an attractive investment prospect because of its financial soundness and dividend growth mix, especially for investors looking for dividend companies offering consistent income streams.

My attention was captured as well by Chevron stock dividend, so I bought my own slice of the cake.

Upon closer examination of Chevron's financial statements and dividend policies, it is clear why investors are paying attention to this massive energy company.

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What is Chevron Corporation

Chevron Corp. was founded in 1906 and is based in San Ramon, California. It serves the global energy and chemical industries with technology, financial management, and administrative support.

Chevron, which is split into upstream and downstream divisions, is primarily involved in the production, development, and exploration of natural gas and crude oil and their transportation through international pipelines and liquefaction procedures. Moreover, it oversees natural gas operations and gas-to-liquids plants.

The downstream industry sells crude oil and refined products and processes, transports, and manufactures petrochemicals, additives, and industrial plastics.

Chevron is a major global player in the oil sector, with a strong focus on environmental responsibility and operational excellence.

CVX ­­­­­­­­­Financial Performance

CVX ­­­­­­­­­Financial Performance and Dividend Growth
CVX ­­­­­­­­­Financial Performance. Source: The Motley Fool

Chevron demonstrated impressive results in its financial report for the fourth quarter and full year 2023, with diluted profits per share (EPS) of $11.35. This amount is the second-best result the corporation has produced in the last ten years, only surpassed by its exceptional 2022 performance. Investor's reaction to the news of these substantial profits was favorable, as seen by the 2.9% rise in the stock price after the disclosure.

With its extensive capital return program, the company has demonstrated its steadfast dedication to providing value to its shareholders, which sets it apart. With a staggering $26.2 billion in stock buybacks and dividends in 2023, Chevron directed a large chunk of its resources in that direction.

This amount significantly reduced the company's existing market capitalization by 9.2%. A significant investment of this magnitude demonstrates Chevron's proactive capital management strategy and unwavering commitment to rewarding its stockholders.

Chevron is committed to creating long-term value by putting shareholder returns first through its capital return program.

In addition to exhibiting Chevron's strong financial position and confidence in its prospects, this strategic resource allocation boosts investor trust.

Looking more closely at Chevron's dedication to shareholder value gives us important new perspectives on the business's resilience and ability to adjust to changing market conditions while providing investors with predictable returns.

Size of CVX Capital Return Program

It's instructive to compare Chevron's capital return program to Apple, another formidable corporate entity, to put its scope into perspective. Both companies have significant capital return strategies, even though they operate in different sectors.

A modest 3.2% of Apple's market capitalization was dedicated to dividends and buybacks in the fiscal year 2023, with the company spending an astounding $77.55 billion and $15.03 billion, respectively.

The discrepancy above highlights Chevron's remarkable dedication to increasing shareholder value, given that the company has allocated $26.2 billion for buybacks and dividends, accounting for 9.2% of its current market capitalization.

This significant investment highlights Chevron's commitment to putting shareholder returns first and confirms its standing as an alluring investment option in the energy sector.

CVX Financial Health and Stability

Source: The Motley Fool
Source: The Motley Fool

Chevron's ability to maintain financial stability while carrying out these strategic efforts makes its capital return program especially noteworthy.

Throughout 2023, Chevron produced a healthy $19.8 billion free cash flow, demonstrating incredible endurance in the oil market's inherent volatility.

By achieving this significant milestone, the company demonstrated its sound financial management techniques and dedication to maximizing shareholder value. It also enabled it to fully pay its dividend commitments with cash.

Chevron has proven to be a stable and dependable investment option, gaining confidence from shareholders and solidifying its position as a major player in the energy sector through its skillful handling of difficult market situations.

Chevron Stock Dividend Growth

CVX Dividend Chart
CVX Dividend Chart. Source: YChart

Chevron's announcement of an 8% increase in its quarterly dividend highlights the company's dedication to its shareholders—this is the 37th year in a row that the payout has increased.

Chevron offers investors a consistent and growing income stream with a 4.3% forward yield. Thus, it is an appealing option for income-seeking investors looking for stability and long-term returns because of its consistent dividend growth trajectory and strong financial position.

The corporation's history of raising dividends shows that it is confident in its capacity to provide long-term cash flows and increase shareholder value. This is how it reached dividend aristocrat status.

Its dividend policy comforts investors in the face of economic uncertainty, confirming the company's standing as a reliable and profitable investment opportunity in the energy sector.

Comparison to Other Dividend Stocks

While Procter & Gamble and Coca-Cola are often commended for their consistent dividend payments, Chevron offers a strong substitute due to its greater yield and aggressive share repurchase policy.

Because of these several elements working together, Chevron is a desirable choice for investors looking for both prospective capital growth and steady income.

Chevron stands out from its competitors due to its strong dividend yield and aggressive capital management strategy, providing investors with a rare chance to gain from both dividend income and possible share price growth.

While income-oriented investors continue to choose traditional dividend stocks, Chevron stands out as a top option for those looking for a well-rounded investing plan that considers both long-term growth potential and income generation due to its better yield and strategic investment initiatives.

Conclusion: Chevron's Value Proposition

Chevron's Value Proposition

To sum up, Chevron presents a solid investment opportunity due to its three key strengths: stable dividend growth, strong financial performance, and a substantial capital return program.

Encouraged by its strong financial performance—which includes a notable rise in diluted earnings per share and a substantial creation of $19.8 billion in free cash flow in 2023—Chevron has cemented its standing as a dependable player in the energy industry.

Further demonstrating its commitment to investor pleasure is the company's massive $26.2 billion capital return program, which it uses to return value to shareholders. Chevron's resilience in navigating the turbulent oil and natural gas market enhances its capacity to withstand market changes and generate consistent profits. This helps to attract more shareholders.

Chevron is still one of the leading players in the oil sector, providing stability and growth potential for dividend-focused portfolios. The company recently raised its dividend, marking 37 years in a row of dividend growth.

I hope this article was instructive for you!

On the way to my Dividend Horizon,

Alexandru Artenie

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Feb 16

Which stock is better? CVX or XOM? Or both?

Dividend Horizon
Dividend Horizon
Mar 10
Replying to

They are both great stocks. I preferred CVX due to its higher yield and higher dividend growth.

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