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If you are an income investor, then Chevron Corporation (NYSE:CVX) should be on your radar. Chevron Corporation, through its subsidiaries, engages in integrated energy, chemicals, and petroleum operations worldwide. Over the past 10 years, the US$232b market cap company has been growing its dividend payments, from $2.72 to $4.76. Currently yielding 3.9%, let's take a closer look at Chevron's dividend profile.
What Is A Dividend Rock Star?
It is a stock that pays a reliable and steady dividend over the past decade, at a rate that is competitive relative to the other dividend-paying companies on the market. More specifically:
- It is paying an annual yield above 75% of dividend payers
- It has paid dividend every year without dramatically reducing payout in the past
- Its dividend per share amount has increased over the past
- It can afford to pay the current rate of dividends from its earnings
- It has the ability to keep paying its dividends going forward
High Yield And Dependable
Chevron currently yields 3.9%, which is high for Oil and Gas stocks. But the real reason Chevron stands out is because it has a high chance of being able to continue to pay dividend at this level for years to come, something that is quite desirable if you are looking to create a portfolio that generates a steady stream of income.
If there's one type of stock you want to be reliable, it's dividend stocks and their stable income-generating ability. In the case of CVX it has increased its DPS from $2.72 to $4.76 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes CVX a true dividend rockstar.
Chevron has a trailing twelve-month payout ratio of 62%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 62% which, assuming the share price stays the same, leads to a dividend yield of 4.1%. Moreover, EPS should increase to $7.92.
When assessing the forecast sustainability of a dividend it is also worth considering the cash flow of the business. A company with strong cash flow, relative to earnings, can sometimes sustain a high pay out ratio.
There aren't many other stocks out there with the same track record as Chevron, so I would certainly recommend further examining the stock if its dividend characteristics appeal to you. However, given this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I've compiled three essential aspects you should further examine:
- Future Outlook: What are well-informed industry analysts predicting for CVX’s future growth? Take a look at our free research report of analyst consensus for CVX’s outlook.
- Valuation: What is CVX worth today? Even if the stock is a cash cow, it's not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CVX is currently mispriced by the market.
- Other Dividend Rockstars: Are there strong dividend payers with better fundamentals out there? Check out our free list of these great stocks here.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.