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Headlines
- Chevron Corp offers a 4.5% yield and is expected to raise its dividend in the upcoming quarter.
- The company has consistently increased its dividend for the past 36 years.
- Chevron’s strong cash flow and share buybacks support its ability to maintain and potentially enhance its dividend.
Chevron Corp (NYSE:CVX) currently provides a yield of 4.5%, and there is anticipation of a dividend increase in Q4. The company has a longstanding track record of raising its dividend annually for 36 years, which enhances its appeal to those interested in stable income from equities.
As of August 9, Chevron’s stock price closed at $144.99, reflecting a 10.4% drop from its recent peak of $161.97 on July 18. Additionally, the stock has fallen over $20, or -12%, from its high this year of $164.69 on April 29. The current annual dividend of $6.52 per share results in a 4.50% yield, drawing attention from those seeking steady returns.
Dividend Increase Prospects Chevron’s capacity to sustain and potentially increase its dividend is supported by its financial performance. In the second quarter, as reported on August 2, Chevron generated an impressive $6.3 billion in cash flow from operations (CFFO). The company’s dividend payment costs amounted to $3.0 billion, meaning the cash flow comfortably covered the dividend expense more than twice over.
Despite a decrease in net income from $6.0 billion last year to $4.4 billion this year, the company’s lower working capital needs helped maintain its CFFO at levels comparable to the previous year.
Chevron’s ability to consistently raise its dividend is also bolstered by its share repurchase programs. By reducing the number of shares outstanding, the company lowers the total dividend expense, facilitating annual increases in the dividend payout.
Expected Dividend Yield Increase In the previous year, Chevron announced a 7.95% increase in its dividend on October 27, coinciding with its Q3 earnings results. This followed a 6.33% increase the year before. If Chevron implements a dividend increase of at least 6% in Q4, the annual dividend per share could rise from $6.52 to $6.91. At the current stock price of $144.99, this would result in an estimated yield of 4.76% ($6.91/$144.99).
This potential rise in yield could serve as a catalyst for further appreciation in Chevron’s stock price.
