To The Moon

$Chevron(CVX)$

Chevron adds reliable value

Every portfolio should have a mix of growth and value. Amazon and Lululemon provide the growth for my hypothetical portfolio, and Chevron brings the value.

With a forward price-to-earnings ratio of only 10x, Chevron is by far the cheapest of the three stocks I've mentioned. Moreover, it's the only one that pays a dividend. The company pays $5.68 per share annually, which works out to a 3.6% dividend yield. In fact, Chevron has increased its annual dividend for 35 years straight, making it a Dividend Aristocrat. And with oil and gas prices near record highs, Chevron appears well positioned to keep increasing its dividend for years to come.

The company generated $30.2 billion of free cash flow in its most recent quarter (the three months ending June 30, 2022). That works out to an excess of $15.61 per share. That's more than enough to enable Chevron to continue paying its regular dividend, and then some. The company also announced an increase of its share repurchase plan, hiking the total from $10 billion to $15 billion.

And if that weren't enough, there's something else to consider. Warren Buffett owns more than $25 billion worth of Chevron shares, or 8.4% of the outstanding shares. In fact, Chevron is the third-largest holding for Buffett's Berkshire Hathaway.

Between its solid dividend, growing share-buyback program, and Warren Buffett's seal of approval, Chevron stands to make its investors happier and richer over the next few years. And that's a recipe everyone can appreciate.