Chevron (CVX), one of the world’s largest integrated energy companies, has raised its dividend annually for 39 consecutive years. If it maintains that streak for 50 years in a row, it will become one of the elite Dividend Kings. It pays a forward yield of 3.9%, and its projected 2026 EPS of $14.11 should easily cover its forward annual dividend rate of $7.12.
Chevron might seem like a cyclical oil stock, but it’s consistently raised its dividend through four official U.S. recessions, ongoing conflicts in the Middle East, and other global economic shocks. Let’s see how it maintained that streak, and why it’s still a great income stock to hold forever.
Why is Chevron so resilient?
Rising oil prices generate tailwinds for upstream companies that explore and extract natural gas, but they often create headwinds for downstream companies that produce the refined products and other petrochemicals. As for the midstream companies that transport oil and gas through pipelines, they aren’t as affected by volatile commodity prices because they simply charge tolls for using their infrastructure.
Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.
Chevron owns upstream, midstream, and downstream businesses, which makes it much more diversified, flexible, and resilient than companies that are too focused on a single market. It also has less exposure to the Middle East than many of its industry peers.
Chevron only needs Brent crude oil (currently at $83 per barrel) to stay above its corporate breakeven price of $50 per barrel through 2030 to support its capex and dividends. The breakeven price for its upstream business is even lower, at around $30 per barrel.
As long as oil stays above those key levels, Chevron can print plenty of cash to buy back more stock, raise its dividends, and expand its business in higher-growth regions like the Gulf of Mexico, Kazakhstan, Australia, and Guyana. It already has a presence in 180 countries, yet it aims to increase annual oil and gas production by 2%-3% through 2030.
Why is Chevron a great stock to buy and hold?
At $188 per share, Chevron still looks like a bargain at 12 times this year’s earnings. From 2025 to 2028, analysts expect its EPS to grow at a 25% CAGR as oil prices remain elevated, it ramps up production, and it implements cost-cutting measures to boost operating margins. So if you’re looking for a simple, stress-free way to profit from the ongoing energy boom while earning some reliable income, Chevron checks all the right boxes.
— Leo Sun
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Source: The Motley Fool
