Chevron (CVX) Continues Pumping Oil and Dividends

Chevron (CVX) Continues Pumping Oil and Dividends

Chevron has increased annual dividend to shareholders every year for the last 25 years with dividend growth likely to continue in the years to come.

On April 25 of this year the company declared a quarterly dividend of $0.90 per share, representing an 11.1 percent increase in the company’s quarterly dividend.

Additionally, Chevron’s Chairman and CEO John Watson noted, "We continue to share our success with our shareholders in the form of meaningful dividend growth. This reflects the strength of our current portfolio and our confidence in the company's compelling growth prospects. Of note, 2012 marks 100 years of continuous dividend payments to our shareholders."

The annual dividend payment has increased by over 9% per year for the past 10 years, but the dividend payout ratio remains less than 50%. For both the company and investors, a lower payout is a good thing because it leaves room for steady dividend growth.

In terms of growth, the company has also managed to maintain impressive increase in annual EPS growth since 2002. Earnings per share rose from a mere $0.54 cents/share in 2004 to an impressive $13.44 in 2011.

Regarding future prospects, Chevron is definitely thinking ahead of the game. The company continues to acquire and develop assets that would provide strong returns in the future and add to its reserves. A great example of this is Chevron’s recent acquisition of Atlas Energy. With a portfolio that includes rolling, profitable projects, investors can definitely benefit from Chevron’s growing bottom line numbers in coming years.  

Compared to its peers such as BP, ExxonMobil, Royal Dutch Shell, and ConocoPhillips, Chevron has generated much higher five-year cumulative returns. Chevron also boasts the highest earnings per barrel in its peer group.

Chevron ranks second after Exxon Mobil in terms of revenues and profits in the petroleum refining industry, but maintains the leading position in total stockholder return over the past 10 years. For 2011, Chevron managed a total stockholder return of an impressive 20.3%.

Fundamentally speaking, Chevron is an attractive energy stock. The company not only has an attractive 21.6% return on capital, but a rather low beta of 1.03 as well. Being only 3% more volatile than the market, investors can rest assure. As of Q2 2012, the company also holds about $21B in cash, equivalents and marketable securities. The company’s balance sheet definitely adds to its attractiveness.   

With a 3.3% dividend yield, and attractively valued at 8 times earnings compared to the industry average of 11 times earnings, Chevron is an energy stock worth holding. According to thirteen analysts, Chevron is a “Strong Buy”. Because of its strong 100-year dividend payment history, it is clear that any investor would be confident holding CVX in their portfolios, seeing how institutional investors alone hold 64% of CVX shares.

Click here to examine the dividends and dividend yields of all 30 stocks of the Dow Jones Industrial Average.

Image: Image courtesy of Sujin Jetkasettakorn at FreeDigitalPhotos.net

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