Profit Guzzling Chevron Hikes Dividend, Announces Massive Share Buyback

For investors in search of yield and share appreciation, Chevron (CVX) is a top stock to consider.

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The megacap energy stock — headquartered in San Ramon, Calif. — reported fourth-quarter earnings on Jan. 27. While the results came in mixed, with EPS of $4.09 missing analyst expectations of $4.39, the company still rounded out 2022 with record earnings and cash flow.

Cash flow from operations in 2022 totaled $49.6 billion, compared with $29.2 billion in 2021. Full-year earnings also skyrocketed to $19.18 per share from $8.29 in 2021.

Chevron Hikes Dividend For 36th Straight Year

Instead of increasing production with record profits, Chevron announced a massive $75 billion dollar share buyback and a dividend hike, much to the ire of the White House.

The $75 billion share buyback program — which represents around 20% of shares outstanding — will start on April 1.

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Also, Chevron said it will increase its dividend 6%, bringing it to $1.51 a share each quarter. The next dividend is payable to shareholders of record on Feb. 16.

The dividend hike should come as no surprise for investors familiar with Chevron because it will mark the 36th consecutive year the company has increased its dividend.

While Chevron’s 3.26% annualized yield is not groundbreaking, with the addition of the massive share buyback there is little doubt the company’s first priority is generating immediate returns for shareholders.

Energy prices, along with Chevron’s profits, are expected to moderate slightly. EPS is projected at $15.87 and $14.85 in 2023 and 2024, respectively. But these numbers are still impressive and support the committed share buybacks as well as future dividend increases.

Chevron also has extremely solid debt for an energy company, with an AA- bond rating from S&P global.

Shares of Chevron are in a flat base with a 198.78 buy point, according to MarketSmith pattern recognition. Over the past few days of softening energy prices, Chevron shares have slid and are now dipping below the 50-day moving average.

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