Chevron, one of the largest multinational energy conglomerates, has had a strong year with its stock price hitting $115 after trading as low as the ~$70 mark a year ago. The energy giant is benefitting from increasing energy prices across the world, as natural gas prices are at record levels and crude oil has recovered recently. We believe the stock will continue its positive momentum thanks to the characteristics below.

Return of the Share buyback

Chevron just posted its highest quarterly profits since 2013 thanks to the rebound in energy markets. Q3 revenues hit $42 billion, up 77% year-on-year. The company now plans to reward their shareholders by performing share buybacks, which last took place in 2016. Chevron is planning on spending as much as $10 billion in repurchasing shares in the open market, which will boost the stock price and result in positive returns for the shareholders. Buybacks are also seen as a sign that company management believe that their shares are under-valued at current levels and are a good investment for the long-term.

Dividend Yield

Another benefit of Chevron stock is that the company has a long history of paying dividends to their shareholders. The current dividend yield is about 5%, which means that there is a strong income return element regardless of how the company will perform in the short to medium-term. If the stock is able to continue its positive trajectory, shareholders will receive a double gain of 1) Income Return from the stable and consistent dividend payout to shareholders, and 2) Price Return from any increase in the stock price. See our Top 20 US dividend yield stocks here for more dividend income ideas.

Wall Street support

Retail and institutional interest is picking up, with Wall Street analysts becoming increasingly bullish on the stock. 55% of analysts surveyed by Bloomberg currently have a “Buy” rating, whilst 45% have a “Neutral/Hold” rating. This is significant as currently no analysts have issued a “Sell” rating.

Overall, Chevron has a strong history of being a large-cap stock that pays solid dividends, but the company is proving to be a strong performer as the world emerges from the pandemic and the energy markets look to remain heated for the near future.

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