Churning out the Dividends - Chevron (CVX)

Energy giant Chevron (CVX) presents a long-term dividend history and a reasonable valuation.

Investors in energy stocks this year received a rude wake-up call with the fall-out from the BP (BP) Gulf of Mexico incident, but those with an appetite for dividend stocks shouldn't write the sector off.
 
One company to consider is multi-national energy giant Chevron Corporation (CVX).
 
Offering investors a dividend yield of 3.3%, Chevron (CVX) provides exposure to the production and distribution of crude oil and natural gas and has operations across the globe. Chevron (CVX) employs around 60,000 people and in 2010 it is expected to spend $21.6bn on capital expenditure.
 
Reporting third quarter earnings recently, Chevron (CVX) delivered earnings of $3.77bn or $1.87 per share for the quarter, compared with $3.83bn or $1.92 per share in the 2009 third quarter.
 
Earnings for the quarter were essentially flat with a year ago, but up sharply for nine months. Operationally, the company continues to show gains in upstream production and progress in downstream restructuring. During the third quarter Chevron (CVX) added exploration prospects in China, Liberia and Turkey, while enjoying exploration success in Australia.
 
This exposure to high-growth emerging markets and high quality assets across the globe is one of the strengths of the Chevron (CVX) group of companies
 
The Board of Directors also confirmed that it would continue an aggressive share buy-back program which is targeting purchases of between $500m and $1bn per quarter.
 
The average selling price for crude oil and natural gas liquids in the 2010 quarter was $70 per barrel, compared with $62 a year earlier. With NYMEX trading around $85 dollars and demand remaining solid, oil plays look likely to continue to deliver strong cash-flows which in turn could translate into stronger dividends.
 
Dividends have been a strong point of Chevron (CVX). The company has consistently returned excess cash and shareholders have seen stock splits in 1951, 1956, 1973, 1981, 1994 and 2004. Over the last five years the company has grown its dividend by 11.2% while growing its cash and cash equivalents to just under $11bn.
 
With industrial activity rising in both developed and emerging markets, demand for sustainable energy resources will continue to drive profits at the likes of Chevron (CVX). On a price to earnings multiple of under 10 and a solid dividend on offer, Chevron (CVX) continues to prove itself an attractive dividend stock.

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