July 19, 2024

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Beat the Dow Jones With This Cash-Gushing Dividend Stock

2 min read

Dividend stocks can be an excellent source of passive income. Those that are best have robust cash flows that support and grow their dividend payout. One stock yielding investors nearly 4% that has raised its dividend for 36 consecutive years is Chevron (NYSE: CVX).

The integrated oil and gas company has benefited from strong tailwinds to its business in recent years. These tailwinds have it raking in cash flow hand over fist, which it has used to make strategic acquisitions and return capital to shareholders through a growing dividend and stock repurchase program. Here’s why this cash-gushing dividend stock can be a solid addition to your portfolio today.

Two people shake hands while standing in front of oil drilling rigs.

Image source: Getty Images.

Chevron has raised its dividend for 36 consecutive years thanks to its balanced business

Investing in oil and gas stocks comes with risk, since these companies can be volatile based on the underlying price of those commodities. Companies with heavy drilling operations benefit when oil prices increase, resulting in attractive margins and cash flows. This business, known as upstream operations, includes exploring, producing, and transporting crude oil and natural gas.

Conversely, if oil prices decline, the companies’ bottom line takes a hit. One way oil and gas companies balance this out is through downstream operations. Chevron’s downstream business includes refining crude oil into petroleum, transporting refined products through pipelines, and running gas stations worldwide.

As an integrated oil and gas company, Chevron can better ride out volatile oil prices. This balanced business model is why Chevron has raised its dividend payout for 36 consecutive years despite being a major player in the volatile oil and gas industry.

Macroeconomic tailwinds helped Chevron rake in cash hand over fist

In recent years, macroeconomic factors have worked in oil and gas companies’ favor. In the early days of the pandemic, demand fell, prices plunged, and the supply of oil tightened significantly in…

2023-12-29 17:17:00

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