Chevron Tops Occidental in Dividend Safety

Chevron and Occidental Petroleum are two large energy companies vying for investors' attention. Chevron offers a higher dividend yield of 3.5%, while Occidental's yield is 1.9%. However, Occidental's lower payout ratio of 30% compared to Chevron's 66% might suggest its dividend is safer.

But the situation is not that simple. The energy sector is inherently volatile, and earnings are not a reliable measure of dividend safety. Both companies have seen their payout ratios fluctuate wildly due to changes in oil prices. Occidental cut its dividend in 2020 when it took on significant debt to acquire Anadarko Petroleum.

Chevron's commitment to its dividend is stronger, with 38 years of annual increases. Its lower debt-to-equity ratio of 0.2x also provides more wiggle room for the company. In contrast, Occidental has reduced its leverage but still trails Chevron in this regard.

In conclusion, while Occidental Petroleum has its growth potential, Chevron's financial strength and dividend history make it a safer bet for investors seeking reliable income.