Dividend Increase: CVX

I’ve been busy with stuff, so the site has fallen on the back burner.

A couple of weeks ago, Chevron (CVX) announced a token dividend increase of $0.01 for the year.  This comes as a surprise to most investors and I certainly did not expect it.  If you read the press release, CVX would have you believe this is 29 years straight of dividend increases.  Sorry I have to call BS on that, it’s a half truth.  Their streak ended 2 years ago at 27 years, as shareholders did not receive an increase in 2015.  The quarterly year end dividend for 2014 was $1.07, and that amount held for all of 2015.  Now because of the timing of dividend increases, their total annual payout has increased for 29 years, but that’s just a slight detail.  It’s also why I show quarterly amounts and annual payouts on my spreadsheets.  Just trying to keep everything honest.  No increase in your quarterly dividend year over year equals no streak in my book.  So the companies streak stands at 1 year.

So here’s some dividend information going back to 2005:

If we look at last 11 years, the quarterly dividend has grown at an average of 8.39%, a little more than doubling in that time frame.  Same thing goes for the annual payout with an average growth rate of 8.59%.  Your dividend income would have a little more than doubled during this time frame as well.  The difference in the averages reflects the timing of the dividend increases.  Chevron has not increased their dividend the same quarter every year.

Lets look at some of the ratios and numbers on CVX:

Market Cap: $209.5 Billion

Current Dividend Yield: 3.89%

Profit Margin: -1.48%

Total Cash: $7.67 Billion

Total Debt: $45.5 Billion

Operating Cash Flow: $13.5 Billion

That profit margin sucks.  Oil prices need to rebound.  I believe the price of a barrel will eventually increase.  It just takes one big disruption to send a worry about oil prices.  I still think the most likely scenario is OPEC actually agreeing to cuts or just turmoil happening out there.

CVX vs S&P500

This is a disappointment as its the first time I’ve made a comparison of a stock not outperforming the S&P500 over a 10 year period.  It’s hard to see in the chart, but I double check and yes CVX underperforms, largely due to the last 2 years.

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So nothing exciting on the CVX front.  Since, I’m largely just a boring buy and hold investor, I’m still sitting long CVX.  I believe there will eventually be a turn around in the price of crude and the big fish (XOM and CVX) can wait out the storm.

 

 

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