Today we are taking a look at another interesting dividend payer; Chevron. CVX is not only a solid company and a dividend achiever but also qualified under my Socially Responsible Dividend Portfolio.


The Company Stock Description:

Chevron is an integrated energy company operating worldwide. In this industry, integrated means a lot of things: exploration, production, manufacturing, creating products, transportation. On top of that, Chevron is also diversifying into chemical production (energy related), mining, nanoscience research and (very interesting), Chevron is a leader in geothermal energy. They seem (and this is why they qualify as a SRI) to be involved in being a good corporate citizen and respectful of the environment.

Stock Graph

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Dividend Graph

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The Company Ratios and Financial Info:

The Dividend metrics are definitely very interesting factors to buy Chevron. The graph below shows continuous dividend growth since February 95 with a bigger spike during the “good oil-run years” right before the 2008 crisis.  There is no doubt that CVX knows how to keep its investors on board.


As is the case with most giants in different industries, you can’t expect huge jumps in terms of sales year after year. Chevron is a well established leader in its industry and will continue to grow at a slow pace. As strong as an icebreaker, it will continue its journey regardless if it hits a storm or not.

Dividend Metrics:

-          Current Dividend Yield: 3.45%

-          5 year Dividend Growth : 10.17%

-          1 year Dividend Growth : 6.8%


Company Metrics :

-          Sales Growth: 2.05%

-          Earning Growths: 16.69%

-          P/E Ratio: 9.57

-          Margin Growth: -3.70%

-          Payout Ratio: 50.55%

-          Return on Equity: 11.74

-          Debt to Capital Ratio: 0.07


Stock Metrics:

-          Ticker: CVX

-          Price: $82.93

-          Trading Volume: 10,341,599

-          Trend (technical analysis): Just started to trade over its 30 days moving average and 200 days moving average.

Upcoming opportunities and dangers:

I’d say that there is not much to say in terms of danger other than the high volatility in the price of oil and gas. This will definitely affect Chevron’s sales and balance sheet from time to time. On the other hand, if you can take apart this “market noise” CVX should maintain its cap.

Another danger related to the oil industry is that Chevron is not protected from a “BP disaster”. We have seen how pipelines could damage the lives of people and the environment. It has also seriously damaged BP’s balance sheet.

Compared to my previous analysis of LLY, CVX has a strong grasp on their future. They recently announced a $26bn investment in exploration.  With this action, they are getting closer to Exxon Mobil’s spending budget. It shows that they are very serious about it.

Interesting enough, CVX’s quest to take care of its employees and the environment makes me think that they will always find a way to maintain a sustainable business model. They are diversifying into other fields while remaining in their expertise (e.g. energy). I actually like the fact that they are looking into geothermal energy since it is a clean and renewable source of energy. This is why I think Chevron is definitely an attractive company.

Final Thoughts on CVX

I must admit that I like at lot of things about CVX; dividends, low P/E ratio, awesome balance sheet and its will to diversify its business model. Definitely, Chevron’s management team members are on board to make sure it stays a leader in its industry. While the potential of huge growth is not necessarily there, this would fit perfectly in a dividend earning portfolio.

There is another recent CVX stock analysis over at The Dividend Monk.

Disclaimer: I do not hold Chevron stocks at the time of the analysis but I am seriously considering adding it to my portfolio.

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11 Comments   |  

11 Comments

December 15, 2010, 11:48 am

I think Chevron is a good bet. Oil and exploration isn’t going anywhere for a while, and the cash flow generated by these businesses can’t be quickly reinvested, thus making them a great dividend play. I need to look into Chevron in particular, but I know that a few big oil companeis are making large investments into renewable and clean energy in order to diversify, and I think that makes sense given the amount of capital they have.

December 15, 2010, 3:35 pm

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December 15, 2010, 4:00 pm

Thanks for the analysis and for the mention.

Chevron is currently my top energy pick and a holding of mine. Great dividend yield/growth, great balance sheet, attractive valuation, and they seem a bit more interested in sustainable business than their competitors.

December 15, 2010, 8:01 pm

I am watching Chevron too but I don’t have it. I am also watching Husky on the Canadian side which has been beaten a little recently.

December 17, 2010, 3:03 am

[...] Dividend Stock Analysis  Chevron CRX A critical way to consider stock investments. [...]

December 18, 2010, 9:53 am

[...] Chevron Stock Analysis The Dividend Guy analyzed my favorite energy holding, Chevron. [...]

December 20, 2010, 6:45 am

[...] need to cross the border and look at Canadian energy companies for that!). I recently took time to analyze Chevron (CVX),  and I think one of its competitor, Exxon Mobile (EXOM) is another interesting pick for the future. [...]

December 22, 2010, 3:27 am

[...] need to cross the border and look at Canadian energy companies for that!). I recently took time to analyze Chevron (CVX),  and I think one of its competitor, Exxon Mobile (EXOM) is another interesting pick for the future. [...]

February 14, 2011, 5:53 pm

[...] The Dividend Guy shares his analysis of Chevron. [...]

February 15, 2011, 6:59 am

[...] jinxed it! In my Chevron Stock Analysis, I was talking that the biggest risk this kind of company was a major lawsuit claim… ouch! So [...]

Dawna
February 15, 2011, 11:46 am

Shame on you and your self interest. Have you any idea what Texaco has done in the rain forests of Ecuador?

How about rape and pillage?

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