Monday, January 31, 2011

Dividend Machine Chevron, CVX

Chevron, an integrated oil and energy company, has been part of my dividend machine portfolio off and on during my entire investing career. Chevron's closing price on Friday, January 28, 2011 was $93.37. This is very close to its 52 week high. Chevron is number eleven in my list of 52 dividend machines to profile over one year.

Chevron will pay a quarterly dividend of $.72 on March 10, 2011 provided you own it before February 14, 2011. The annual dividend yield is 3.08%. Chevron earns $8.37 per share and those earnings increased by 8.54% over the past year. I believe this earnings growth will continue as the world continues to need energy. Chevron consistently increases the dividend. Over the past 5 years, the dividend has increased about 10% a year. I like a company that shares its growth with its owners. Chevron has a stellar balance sheet and is one of the strongest of the group with a debt to equity ratio of .10.

If Chevron's stock price goes up on Monday, it may not meet our criteria of a minimum of 3% dividend yield. The stock price would have to increase to greater than $96 per share to break the 3% dividend yield barrier. I anticipate a price increase because the unrest in Egypt may cause an increase in petroleum prices and Chevron tends to trade in line with oil prices. Yet, I learned a long time ago that predicting stock prices is beyond my crystal ball's capability. I cannot predict the move in any given stock on any given day. I would have expected CVX's stock price to have gone up on Friday and it actually dipped by $1.38.

Chevron is a volatile company as far as stock price is concerned. Over my investing career, the price has moved from $8.00 a share October 30, 1987 all the way up to $104.63 per share May 30, 2008. March 31, 2009 CVX's price dipped to $56.12 a nice buying opportunity indeed. If you invest in CVX, you have to determine if you want to move in and out of the stock. I would write calls on it and if they take my stock, I essentially end up moving in and out. Alternatively, you can decide to stick with it long term and use the dips to reinvest your ever increasing dividend at the lower price range.

Many of our other dividend machines have been smaller companies. Chevron is a monster but one you should consider for your dividend machine portfolio. CVX provides both growth and income possibilities.

Very Truly Yours,


Enhanced by Zemanta