High-discount oil stocks like Chevron Corp. (CVX) and ExxonMobil (XOM) are part of an elite group known as Dividend Aristocrats, which are S&P 500 companies that have consistently increased their dividends for at least 25 consecutive years. These energy sector stocks offer investors the potential for regular income through quarterly dividend payments, with a history of dividend growth and higher yields compared to other industries.
In this article, we’ll take a deeper dive into two high-dividend oil stocks, CVX and XOM, exploring their past performance, dividend payout ratios, and how they stack up against other dividend aristocrats in the energy sector. We’ll also discuss factors like free cash flow, balance sheets, and the economic environment that can impact investment decisions in these stock market gems.
Chevron Corp Overview
Chevron Corp (CVX) is a leading integrated energy company listed on the Nasdaq exchange and part of the Nasdaq 100 index. With a real-time price of $159.16 (as of April 1, 2024) and a consistent dividend payment record since 1984, Chevron has established itself as a strong candidate for dividend investors.
Key Highlights:
- 37 consecutive years of dividend increases
- Annual dividend of $6.52 with a yield of 4.10% and quarterly payout frequency
- Dividend payout ratio of 57.39% and a one-year dividend growth rate of 6.76%
- 12-month trailing dividend yield of 4.03% and forward dividend yield of 4.11%
- Annual dividend growth rate of 5.40% (3 years) and 6.00% (5 years)
- Revenue growth of approximately 28.60% per year, outperforming 80.52% of global competitors
Chevron’s dividend yield range for the past 5 years has been between 2.98% and 8.96%, with an average of 4.03%. The company’s dividend yield for April 1, 2024, stands at 3.87%. Chevron’s dividend growth CAGR is impressive, with 4.13% (1Y), 7.95% (3Y), 6.49% (5Y), 4.47% (10Y), and 7.52% (20Y).
As one of the world’s leading integrated energy companies, Chevron engages in every aspect of the oil, natural gas, and geothermal energy industries. The company has recently announced plans to drill 30 new wells in Venezuela’s Orinoco Belt by 2025, aiming to increase production capacity by 35% to 250,000 barrels a day. Additionally, Chevron is setting up a solar power plant in Panama, demonstrating its commitment to diversifying its energy portfolio.
ExxonMobil Overview
ExxonMobil (XOM), another Dividend Aristocrat in the oil sector, has consistently increased its dividend for 39 consecutive years. With a current dividend yield of 3.27% and an annualized forward dividend yield of 3.80%, ExxonMobil remains an attractive choice for income-focused investors.
Key Highlights:
- Quarterly dividend payments since 1983, with a recent dividend of $0.95 per share announced for 2024-03-11
- Dividend payout ratio of 0.39 as of 2023-12-31, allowing for future growth and financial stability
- Strong profitability rank (7 out of 10) and revenue growth of approximately 25.50% per year
- Q4 2023 earnings of $7.6 billion ($1.91 per share) and full-year 2023 earnings of $36.0 billion ($8.89 per share)
- $55.4 billion in cash flow from operating activities and $32.4 billion distributed to shareholders in 2023
- Low debt-to-capital ratio (16%) and net-debt-to-capital ratio (5%), with a period-end cash balance of $31.6 billion
- Achieved $9.7 billion in cumulative structural cost savings in 2023, exceeding the $9 billion plan, and aims for $15 billion in savings through 2027
Additionally demonstrating ExxonMobil’s financial strength are its AAA credit rating from Standard & Poor’s, sizeable cash reserves of $24 billion (as of 2020), and a sustainable dividend payout ratio of about 60%. The company’s long-term debt-to-equity ratio of 0.32 indicates a relatively low level of debt compared to its equity.
Despite the challenges posed by the COVID-19 pandemic, ExxonMobil remains focused on growth and sustainability. The company aims to produce 2 million barrels per day from the Permian Basin and increase Guyana’s output to 1.2 million barrels per day by 2027. With a year-to-date gain of 13.5%, outperforming both the XLE and the broader S&P 500, ExxonMobil continues to be a strong player in the energy sector and a reliable choice for dividend investors seeking regular income and long-term growth potential.
Comparative Analysis
When comparing Chevron and ExxonMobil, both companies have demonstrated strong financial performance in recent years. Chevron’s stock rallied by nearly 3% in 2023, while Exxon’s stock has risen by over 115% in the last three years. Both companies have shown resilience even at lower Brent crude oil prices, such as the $80 per barrel average in 2023.
Dividend payments and growth are key factors for income investors. Chevron announced a Q4 dividend increase of 8%, marking its 37th consecutive annual increase, and currently yields 4.3%. Exxon, on the other hand, raised its dividend by 4.4% in Q4 and has a yield of 3.7%. Chevron’s dividend yield has been higher than Exxon’s in 8 out of the past 10 years (2013–2023).
When considering other high-yield dividend stocks in the energy sector, investors may also look at:
- Devon Energy Corporation (DVN): 9.53% dividend yield and a 22% CAGR dividend increase since 1999.
- EOG Resources (EOG): 22% CAGR dividend increase since 1999 and a net cash position of $900 million.
- Kinder Morgan (KMI) is a leading energy infrastructure company with a 7-year history of self-funding capital expenditures and dividends.
- Phillips 66 (PSX): A diversified energy company has been consistently rewarding shareholders with dividends since 2013.
Investors should also consider factors such as debt-to-equity ratios, dividend payout ratios, and the company’s ability to generate free cash flow when making investment decisions based on the high yields of dividend oil stocks. Chevron and ExxonMobil both have a “moderate buy” consensus rating from analysts, indicating their potential for long-term growth and regular income through quarterly dividend payments.
Conclusion and Recommendations
In summary, high-discount oil stocks like Chevron Corp. (CVX) and ExxonMobil (XOM) have proven to be reliable choices for income investors seeking regular quarterly dividends and long-term growth potential. Both companies have demonstrated strong financial performance, impressive dividend growth rates, and the ability to generate substantial free cash flow, making them attractive options for those looking to invest in the energy sector.
When considering investment decisions in high-dividend stocks, it’s crucial to analyze factors such as dividend payout ratios, balance sheets, and the overall economic environment. For a deeper dive into the best dividend stocks and to explore additional investment opportunities in the energy sector, real estate investment trusts, and more, visit our comprehensive guide on dividend investing.
5 Key Financial Metrics for Evaluating Oil Stocks
FAQs
What are the top oil stocks that offer dividends? Some of the best oil stocks that provide dividends include Chevron, EOG Resources, ExxonMobil, Kinder Morgan, and Phillips 66.
Which Dividend Aristocrats currently offer the highest dividend yields? The Dividend Aristocrats with the highest yields are Amcor (AMCR), 3M Company (MMM), and Realty Income Corp (O), with Amcor being at the top of the list.
Can you list the top 3 dividend-paying stocks? The top 3 dividend-paying stocks are not specifically listed in the provided information.
Is there an investment fund that specifically tracks Dividend Aristocrats? Yes, the ProShares S&P 500 Dividend Aristocrats ETF is the exclusive fund that strictly follows the 66 official S&P 500 Dividend Aristocrats. Additionally, there are various other high-dividend ETFs that include a similar collection of stocks known for consistently increasing their dividends over time