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Is Chevron's 4.8% Dividend Yield Enough to Drive a Buy?
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Key Takeaways
Chevron boasts a 4.8% yield and 38 consecutive years of dividend growth, outperforming key rivals.
CVX earnings is expected to drop 32% in 2025 before a 27% rebound in 2026 from key project gains.
Shares have fallen 2.5% over three years, underperforming ExxonMobil's 23% and Shell's 36% gains.
Chevron Corporation (CVX - Free Report) remains a household name in energy, boasting an incredible dividend history. It has consistently increased its payout for 38 years straight! With a current dividend yield of 4.8%, Chevron stands tall among its rivals, outperforming ExxonMobil's (XOM - Free Report) 3.7% and Shell's (SHEL - Free Report) 4.1%.
CVX, XOM, SHEL Dividend Yields
Image Source: Zacks Investment Research
Backed by a rock-solid balance sheet, low net debt, and an investor-friendly capital return strategy, Chevron certainly appeals to income-focused investors seeking stability. However, its shares have declined modestly over the past few years, while the broader market has seen significant gains during the same period. This raises a crucial question: Is Chevron's dividend alone a good enough reason to buy CVX?
At first glance, Chevron's dedication to returning money to its shareholders is clear. The company handed out $27 billion in dividends and buybacks in 2024 and aims for $10-$20 billion in annual share repurchases. Yet, a closer look reveals some concerns. Chevron's earnings per share (EPS) are expected to go down this year before bouncing back in 2026. Plus, a high dividend payout ratio of 74 raises questions about its sustainability, especially if energy markets stay under pressure.
With wider economic challenges, increasing needs for reinvestment, and shifts in its production mix, the outlook for Chevron isn't entirely bullish, but it's not bearish either. Let's dig a bit deeper into Chevron.
Chevron’s Dividend Strength Trusted by Income Investors
There is no doubt that Chevron's dividend is among the most reliable in the energy sector. The company hasn't cut its payout in 90 years and has raised it at a compound annual growth rate (CAGR) of over 6% for the past five years. In Q1 2025 alone, Chevron returned $6.9 billion to its shareholders, including $3 billion in dividends. Even with volatile commodity prices, Chevron expects to maintain its yearly buyback target, showing confidence in its cash-generating ability.
Image Source: Zacks Investment Research
Compared to ExxonMobil and Shell, Chevron's dividend looks particularly attractive in terms of raw yield. However, ExxonMobil's lower payout ratio (53) and focus on long-life projects like Guyana and LNG offer more cushion for dividend growth. Shell, on the other hand, is still recovering after cutting its dividend in 2020 but has made its energy transition strategy a priority. Chevron stands out for its dividend stability, but maintaining the current trajectory could be challenging if earnings remain under pressure.
Investors should know that while Chevron's dividend hasn’t seen a cut in nearly a century, there have been periods where growth was paused. For instance, between 2014 and 2017, Chevron went 10 straight quarters without raising its payout during an oil downturn.
CVX’s Earnings Outlook: Near-Term Dip Followed by Recovery
Chevron's EPS trends tell a mixed story. After a strong 2024, Chevron's EPS is forecast to fall 32% in 2025. The main reasons? Lower commodity prices, the loss of cash-rich Venezuelan oil a downtrend in refining margins, and a growing reliance on short-cycle assets like the Permian. While flexible, these Permian assets demand constant reinvestment. However, a projected 27% rebound in 2026 suggests the earnings slump for Chevron might be temporary, boosted by increased output from the Tengiz project and efficiency gains in the Permian.
Image Source: Zacks Investment Research
This unpredictable EPS path mirrors challenges faced by Chevron's industry peers. Even ExxonMobil has had to heavily rely on its long-cycle assets to navigate downturns, while Shell continues to balance optimizing fossil fuels with expanding clean energy. The key difference for Chevron is that its shorter-cycle focus might amplify earnings volatility more than its rivals.
Chevron’s Lagging Stock Performance
It's impossible to ignore Chevron's lackluster share performance. While ExxonMobil is up 23% and Shell is up 36% over the last three years, CVX has actually lost 2%. This lag reflects a combination of broader economic headwinds and company-specific pressures, including the loss of Venezuelan production and growing concerns from the Hess arbitration. While Chevron's dividend has provided some protection against downside, total returns from Chevron simply haven't kept pace with broader markets — or even its sector peers.
CVX, XOM, SHEL 3-Year Stock Performance
Image Source: Zacks Investment Research
Conclusion
Chevron offers one of the most dependable dividends in the market, boasting nearly 5% backed by four decades of consecutive growth and a strong balance sheet. However, a near-term decline in EPS, a high payout ratio, and recent underperformance suggest that Chevron's stock isn't without risks. The expected earnings rebound in 2026 provides some optimism for Chevron, but the path to get there includes its share of challenges.
CVX currently carries a Zacks Rank #3 (Hold), reflecting balanced risk-reward dynamics. For income-focused investors, Chevron remains a credible hold with defensive appeal. But for those seeking significant capital appreciation, it might be wise to wait for clearer signals of sustained earnings recovery or a re-evaluation of Chevron's stock price.
While Chevron's dividend hasn’t seen a cut in nearly a century, there have been periods where growth paused. A repeat scenario isn't out of the question, especially given the current economic climate for Chevron.
Image: Shutterstock
Is Chevron's 4.8% Dividend Yield Enough to Drive a Buy?
Key Takeaways
Chevron Corporation (CVX - Free Report) remains a household name in energy, boasting an incredible dividend history. It has consistently increased its payout for 38 years straight! With a current dividend yield of 4.8%, Chevron stands tall among its rivals, outperforming ExxonMobil's (XOM - Free Report) 3.7% and Shell's (SHEL - Free Report) 4.1%.
CVX, XOM, SHEL Dividend Yields
Backed by a rock-solid balance sheet, low net debt, and an investor-friendly capital return strategy, Chevron certainly appeals to income-focused investors seeking stability. However, its shares have declined modestly over the past few years, while the broader market has seen significant gains during the same period. This raises a crucial question: Is Chevron's dividend alone a good enough reason to buy CVX?
At first glance, Chevron's dedication to returning money to its shareholders is clear. The company handed out $27 billion in dividends and buybacks in 2024 and aims for $10-$20 billion in annual share repurchases. Yet, a closer look reveals some concerns. Chevron's earnings per share (EPS) are expected to go down this year before bouncing back in 2026. Plus, a high dividend payout ratio of 74 raises questions about its sustainability, especially if energy markets stay under pressure.
With wider economic challenges, increasing needs for reinvestment, and shifts in its production mix, the outlook for Chevron isn't entirely bullish, but it's not bearish either. Let's dig a bit deeper into Chevron.
Chevron’s Dividend Strength Trusted by Income Investors
There is no doubt that Chevron's dividend is among the most reliable in the energy sector. The company hasn't cut its payout in 90 years and has raised it at a compound annual growth rate (CAGR) of over 6% for the past five years. In Q1 2025 alone, Chevron returned $6.9 billion to its shareholders, including $3 billion in dividends. Even with volatile commodity prices, Chevron expects to maintain its yearly buyback target, showing confidence in its cash-generating ability.
Compared to ExxonMobil and Shell, Chevron's dividend looks particularly attractive in terms of raw yield. However, ExxonMobil's lower payout ratio (53) and focus on long-life projects like Guyana and LNG offer more cushion for dividend growth. Shell, on the other hand, is still recovering after cutting its dividend in 2020 but has made its energy transition strategy a priority. Chevron stands out for its dividend stability, but maintaining the current trajectory could be challenging if earnings remain under pressure.
Investors should know that while Chevron's dividend hasn’t seen a cut in nearly a century, there have been periods where growth was paused. For instance, between 2014 and 2017, Chevron went 10 straight quarters without raising its payout during an oil downturn.
CVX’s Earnings Outlook: Near-Term Dip Followed by Recovery
Chevron's EPS trends tell a mixed story. After a strong 2024, Chevron's EPS is forecast to fall 32% in 2025. The main reasons? Lower commodity prices, the loss of cash-rich Venezuelan oil a downtrend in refining margins, and a growing reliance on short-cycle assets like the Permian. While flexible, these Permian assets demand constant reinvestment. However, a projected 27% rebound in 2026 suggests the earnings slump for Chevron might be temporary, boosted by increased output from the Tengiz project and efficiency gains in the Permian.
This unpredictable EPS path mirrors challenges faced by Chevron's industry peers. Even ExxonMobil has had to heavily rely on its long-cycle assets to navigate downturns, while Shell continues to balance optimizing fossil fuels with expanding clean energy. The key difference for Chevron is that its shorter-cycle focus might amplify earnings volatility more than its rivals.
Chevron’s Lagging Stock Performance
It's impossible to ignore Chevron's lackluster share performance. While ExxonMobil is up 23% and Shell is up 36% over the last three years, CVX has actually lost 2%. This lag reflects a combination of broader economic headwinds and company-specific pressures, including the loss of Venezuelan production and growing concerns from the Hess arbitration. While Chevron's dividend has provided some protection against downside, total returns from Chevron simply haven't kept pace with broader markets — or even its sector peers.
CVX, XOM, SHEL 3-Year Stock Performance
Conclusion
Chevron offers one of the most dependable dividends in the market, boasting nearly 5% backed by four decades of consecutive growth and a strong balance sheet. However, a near-term decline in EPS, a high payout ratio, and recent underperformance suggest that Chevron's stock isn't without risks. The expected earnings rebound in 2026 provides some optimism for Chevron, but the path to get there includes its share of challenges.
CVX currently carries a Zacks Rank #3 (Hold), reflecting balanced risk-reward dynamics. For income-focused investors, Chevron remains a credible hold with defensive appeal. But for those seeking significant capital appreciation, it might be wise to wait for clearer signals of sustained earnings recovery or a re-evaluation of Chevron's stock price.
While Chevron's dividend hasn’t seen a cut in nearly a century, there have been periods where growth paused. A repeat scenario isn't out of the question, especially given the current economic climate for Chevron.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.