Chevron is an integrated energy company.
The energy sector is highly volatile, but Chevron is built to survive from the balance sheet up.
With an attractive dividend yield backed by a growing dividend, Chevron is a slow and steady wealth builder.
Dividend investors tend to prefer boring businesses, which can lead some to overlook volatile sectors like energy. That, however, would mean missing out on stocks that could help make you richer, like energy giant Chevron (NYSE: CVX). Here’s why buying Chevron today and holding through 2030, or even longer, could be a great investment decision.
Oil and natural gas are highly volatile commodities prone to dramatic and swift price moves. That, in turn, has an impact on the businesses that produce energy, like Chevron. Simply put, Chevron’s top and bottom lines can swing wildly from year to year and even quarter to quarter. You need to have a strong constitution to own an energy stock.
But even the most conservative investor should consider having some exposure to energy. The world is highly dependent on oil and natural gas. Even when the prices of these vital fuels are low, demand is still usually pretty robust. Even the slow shift toward cleaner energy alternatives isn’t likely to end the use of oil and natural gas. Companies like Chevron provide a basic necessity of modern life.
Chevron is a great choice, particularly if you are a dividend investor. And the fact that oil prices are a bit weak today makes now a great time to jump aboard, since that fact has dampened Chevron’s stock price and left it with an attractive yield of 4.3%.
To be fair, a deep energy downturn would provide a better entry point. But that 4.3% dividend yield compares very favorably to the 1.2% yield of the broader market and the 3.2% yield of the average energy stock. Chevron’s dividend, meanwhile, has been increased annually for 38 consecutive years, a feat matched by only one other major energy company, ExxonMobil (NYSE: XOM). While Exxon’s 43-year streak is longer, that company’s dividend yield is a less attractive 3.5% right now.
Both of these U.S. energy giants have a similar, diversified, business model. As integrated energy companies they have exposure to the upstream (energy production), the midstream (pipelines), and the downstream (chemicals and refining). That diversification helps to soften the industry’s inherent swings, since each segment operates a little differently through the energy cycle.
finance.yahoo.com
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