Examining the Sustainability and Growth of Chevron Corp's Dividends
Chevron Corp (CVX, Financial) recently announced a dividend of $1.63 per share, payable on 2024-03-11, with the ex-dividend date set for 2024-02-15. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into Chevron Corp's dividend performance and assess its sustainability.
What Does Chevron Corp Do?
Chevron is an integrated energy company with exploration, production, and refining operations worldwide. It is the second-largest oil company in the United States with production of 3.0 million barrels of oil equivalent a day, including 7.7 million cubic feet a day of natural gas and 1.7 million barrels of liquids a day. Production activities take place in North America, South America, Europe, Africa, Asia, and Australia. Its refineries are in the U.S. and Asia for total refining capacity of 1.8 million barrels of oil a day. Proven reserves at year-end 2022 stood at 11.2 billion barrels of oil equivalent, including 6.1 billion barrels of liquids and 30.9 trillion cubic feet of natural gas.
A Glimpse at Chevron Corp's Dividend History
Chevron Corp has maintained a consistent dividend payment record since 1984. Dividends are currently distributed on a quarterly basis. Chevron Corp has increased its dividend each year since 1988. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 36 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down Chevron Corp's Dividend Yield and Growth
As of today, Chevron Corp currently has a 12-month trailing dividend yield of 4.03% and a 12-month forward dividend yield of 4.11%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Chevron Corp's annual dividend growth rate was 5.40%. Extended to a five-year horizon, this rate increased to 6.00% per year. And over the past decade, Chevron Corp's annual dividends per share growth rate stands at 4.20%.
Based on Chevron Corp's dividend yield and five-year growth rate, the 5-year yield on cost of Chevron Corp stock as of today is approximately 5.39%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-12-31, Chevron Corp's dividend payout ratio is 0.46.
Chevron Corp's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Chevron Corp's profitability 6 out of 10 as of 2023-12-31, suggesting fair profitability. The company has reported net profit in 8 years out of the past 10 years.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Chevron Corp's growth rank of 6 out of 10 suggests that the company has a fair growth outlook.
Revenue is the lifeblood of any company, and Chevron Corp's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Chevron Corp's revenue has increased by approximately 28.60% per year on average, a rate that outperforms approximately 80.52% of global competitors.
Investing in Chevron Corp's Dividend Future
Considering Chevron Corp's dividend payments, growth rate, payout ratio, profitability, and growth metrics, investors can be cautiously optimistic about the company's ability to maintain its status as a dividend aristocrat. While past performance is not indicative of future results, Chevron Corp's track record and current financial health give a strong basis for continued dividend reliability. For those seeking to enrich their portfolios with high-dividend yield stocks, GuruFocus Premium offers invaluable tools like the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
