The company is on track to generate billions of dollars in free cash flow
Chevron reported strong first-quarter results, becoming one
of the few oil companies to return to profitability.
Management seems committed to rewarding shareholders in the
long run.
Favorable macroeconomic outlook and recent investments make
Chevron an attractive bet for value and income investors.
Chevron Corp. (CVX) is an American integrated energy company
operating in more than 180 countries. The company is active in hydrocarbon
exploration and development, chemical and mining activities, power generation,
refining and fuel transportation. It has an active portfolio of renewable
assets, including geothermal, solar, wind, biofuel, fuel cells and hydrogen.
The energy giant seems to be recovering strongly from the
oil market turmoil created by the global recession, which is evident from its strong
first-quarter financial performance. Chevron posted a profit for the first
quarter of 2021 and increased its dividend by 4%, becoming one of the very few
oil giants to return to profitability. Chevron reported a substantial
improvement in cash flows as well, driven by higher oil prices. Warren Buffett,
the investing legend, is bullish about the company's long-term success due to
its solid balance sheet and ability to produce consistent cash flows. In the
fourth quarter of 2020, Berkshire Hathaway Inc. (BRK.A) (BRK.B) purchased 48.5
million shares of Chevron.
The outlook is promising for dividend investors
Chevron pays a quarterly dividend of $1.34 per share, which
converts into an annual dividend yield of 5% at the current stock price of
around $108. Although this is a very attractive yield in a low-interest rate
environment, investors need to evaluate many factors, including the company's
future cash flow generation ability and the executives' commitment to maintaining
or improving the dividend per share. Chevron ticks all these boxes.
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