Here's Why Chevron Is a No-Brainer Dividend Stock
If you buy an energy stock, one of the most important things you have to understand is the inherently volatile nature of the commodity-driven sector. In fact, oil and natural gas price swings can be shockingly swift and dramatic. And yet Chevron (NYSE: CVX) has proven time and again that dividend investors can count on it. Here's why Chevron is a no-brainer dividend stock in the energy patch.
The 2020 global pandemic threw oil prices into a tailspin, as social distancing, business closures, and working from home led to a massive decline in demand amid the public health crisis. The industry downturn was fast and deep, with West Texas Intermediate crude oil prices, a key U.S. oil benchmark, falling below zero for a brief moment in time. There was an unusual confluence of events that led to that, but step back and consider what a negative price means -- energy producers were technically paying customers to take oil.
And yet, integrated energy giant Chevron increased its dividend in 2020 despite the massive price drop. The dividend was increased again in 2021 and once more in 2022. In fact, Chevron's streak of consecutive annual dividend increases is up to 35 years, making it a Dividend Aristocrat. That's incredible given the inherently cyclical nature of the oil sector. But the real truth is, while the pandemic itself was shocking and the reaction in the energy sector unsettling, the prices of oil and natural gas rise and fall all the time. Chevron just did the same thing it always does to deal with it, and, as usual, lived to fight another day with its dividend still intact.
Source Fool.com
