Berkshire Hathaway’s (NYSE: BRK.A) Warren Buffett is well-known for his investment prowess, especially in picking some of the best dividend-paying companies that he has, over the years, turned into cash-generating machines.
One such stock is oil and gas producer Chevron (NYSE: CVX), among the latest additions to Buffett’s stock portfolio. The Oracle of Omaha’s stake in the company was initiated during the coronavirus pandemic market sell-off in 2020.
As of the third quarter of 2024, Berkshire owned 118,610,534 shares of Chevron, and the company’s annual dividend of $6.52 per share translates to a staggering $773.3 million in dividend income for Buffett’s firm this year.
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However, this figure may rise, considering Chevron has consistently increased its dividend over the last 37 years.
Should you buy CVX stock?
CVX might be an ideal pick for investors, especially those chasing income from the stock market. In addition to the dividend allure, the stock has exhibited modest gains in recent months despite volatility.
Specifically, Chevron was trading at $156.21 as of press time, dropping 0.65% in 24 hours. However, the CVX share price is up almost 4% in the past year.
Besides the dividend prowess, the company has several catalysts for growth in the coming quarters.
Chevron’s financial muscle is at the top of the list. For instance, in the first three quarters of 2024, the oil giant reported it generated $22.8 billion in operating cash flow.
At the same time, the funds enabled Chevron to buy back $10.5 billion in shares. With this backing, investors can be guaranteed continued steady dividend payments in the absence of any major market headwinds.
Meanwhile, ahead of the Q4 2024 earnings report, the firm is expected to post some losses. Specifically, Chevron is estimated to post quarterly earnings of $2.19 per share, a year-over-year drop of 36.5%. Revenues are expected to be $46.96 billion, down 0.5% YoY.
At the same time, Chevron is aiming to enhance production through the expansion of high-return assets in the Permian Basin, Gulf of Mexico, and Kazakhstan.
According to estimates, this move could result in over 3% annual production growth and more than 10% free cash flow through 2027, depending on the stability of the crude oil market.
Another potential growth catalyst is tied to Chevron’s $53 billion Hess acquisition, approved in January 2025. This deal will boost Chevron’s global portfolio with a stake in Guyana’s Stabroek Block, high-margin shale assets, and Gulf of Mexico operations.
As a result, the San Ramon-based energy giant is likely to gain a competitive edge in the market.
Wall Street take on CVX stock price
CVX could see a 12.39% gain over the next year regarding the stock’s growth, according to a consensus of 19 Wall Street analysts at Tipranks. The average forecast is $175.56, with estimates ranging from $154.00 to $195.00.
Chevron offers strong dividend growth, solid cash flow, and promising expansion plans. With a positive growth outlook and moderate price appreciation projections from Wall Street, it’s a solid pick for income-focused investors. However, the stock remains susceptible to overall market downturns.
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