Chevron Dividend Reigns Supreme Amid Oil Price Volatility
Chevron and Occidental Petroleum are two major oil companies that have been making headlines in recent times. Chevron offers investors a well-above-market dividend yield of 3.5%, while Occidental's yield is lower at 1.9%. However, Occidental's lower yield has raised questions about its safety. To determine which company's dividend is safer, we need to consider the entire energy cycle.
The oil industry is known for its volatility, with prices fluctuating frequently and dramatically. This makes it challenging for investors to assess dividend safety using traditional metrics such as earnings per share or dividend payout ratio. In fact, both Chevron and Occidental have seen their payout ratios rise above 100% in the past, highlighting the risks associated with investing in this sector.
Occidental's trailing 12-month dividend payout ratio is roughly 30%, while Chevron's is about 66%. However, history has shown that Chevron's commitment to its dividend is unmatched. The company has increased its dividend annually for 38 years, demonstrating a strong track record of financial stability and investor confidence.