We recently compiled a list of the 13 Best Natural Gas and Oil Dividend Stocks To Buy. In this article, we are going to take a look at where Chevron Corporation (NYSE:CVX) stands against the other natural gas and oil dividend stocks.
The United States of America is the Largest Oil Producing Country in the World. The country’s oil production has surged by almost 50% over the last decade, reaching just over 13.45 million barrels per day (bpd) in October 2024. However, despite the historically high levels of output, total US production growth has slowed in recent years, climbing only about 280,000 bpd last year. The US Energy Information Administration (EIA) has forecasted the country’s crude oil production to flatten in 2026, with operators reducing the number of active drilling rigs as crude oil prices fall, allowing natural declines in existing wells to overtake production from new wells next year. The EIA expects US crude production to reach an all-time high in 2025, averaging 13.5 million bpd, increasing slightly to 13.6 million bpd in 2026.
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The US natural gas output also stands near an all-time high as a period of strong demand and improved prices sparked a resurgence in production. The EIA expects these prices to further increase in 2025 and 2026 as demand for natural gas is projected to grow mainly due to a jump in LNG exports. The country’s natural gas sector is also set to benefit greatly from the ongoing AI boom, as several dozen new gas-fired power plants are expected to be built in the US in the next few years. According to energy data provider Enverus, a total of 80 new gas power plants could be constructed in America by 2030, adding about 46 GW of new capacity – 20% higher than the gas capacity additions in the last five years.
President Donald Trump has made repeated calls to the American oil and gas sector to increase production as he holds the fossil fuel industry as a centerpiece of his broader economic mission. However, the country’s O&G majors are reluctant as increasing output even further could create a glut and drive prices down, which they want to avoid.
Instead, producers are focused on keeping their capital spending under control and attaining higher operational efficiencies, while prioritizing returning cash to shareholders after a pricing rout in the last decade hurt profits and share prices. Several oil bigwigs have even had to resort to borrowing money to make sure they keep their shareholders happy. According to a report by Janus Henderson, companies in the energy sector distributed over $49 billion in dividends during the third quarter of 2024, up from $32.2 billion three years ago. However, maintaining such high payouts to shareholders will get even tougher for the oil majors in the future, as the EIA expects Brent crude oil prices to fall 8% to average $74 a barrel in 2025, then fall further to $66 a barrel in 2026.
The energy sector has witnessed considerable fluctuations over the last few months, rising by over 6% in November before falling almost 10% in December. The broader energy sector ended 2024 with a return of just 5.72%, significantly lagging behind gains of 25% by the wider market.
Methodology:
To collect data for this article, we observed various companies working in the oil and gas sector and then picked out companies with the highest dividend yields as of February 6, 2025, and ranked them by their number of hedge fund investors according to the Insider Monkey database as of Q3 2024. Following are the Best Natural Gas and Oil Dividend Stocks to Buy Now.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An aerial view of an oil rig at sea, the sun glinting off its structure.
Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 63
Dividend Yield: 4.5%
Chevron Corporation (NYSE:CVX) produces crude oil, natural gas, and many other essential products, and is the second-largest integrated energy company headquartered in the United States. The company owns five US fuel refineries and also boasts a network of Chevron and Texaco service stations.
Chevron Corporation (NYSE:CVX) reported Q4 2024 earnings of $2.06 per share, missing analysts’ estimates as weak margins dragged its refining business into a loss for the first time since 2020. However, the company reported a revenue of $52.23 billion during the quarter, up 10.7% YoY and above Wall Street estimates by over $3.8 billion, as it increased its worldwide and US production by 7% and 19% respectively to record levels in 2024. The company also generated nearly $8 billion in proceeds from asset sales last year and maintained a strong balance sheet, ending the year with a net debt ratio of 10%.
Chevron Corporation (NYSE:CVX) remains committed to returning value to its shareholders and announced a 5% increase in its quarterly dividend to $1.71 per share, marking the 38th consecutive year with an annual increase in dividend payment per share. Over the last five years, the oil major has grown its dividend faster than the broader market and nearly double the rate of its closest peer. In the past three years, the company has returned $75 billion in cash to shareholders via dividends and share buybacks and has pledged to continue buying back $10 billion to $20 billion of its shares annually, depending on market conditions.
Chevron Corporation (NYSE:CVX) stated last month that it has started oil production from the Whale semi-submersible platform in the deepwater US Gulf of Mexico, bringing the company another step closer to reaching 300,000 net barrels of oil equivalent per day in the Gulf by 2026. Moreover, the project features energy-efficient gas turbines and compression systems, as well as a simplified design model that is expected to deliver lower emissions, lower costs, and higher returns.
Chevron Corporation (NYSE:CVX) was also included in our list of the 10 Best Energy Dividend Stocks to Buy Right Now.
Overall CVX ranks 3rd on our list of the best natural gas and oil dividend stocks to buy. While we acknowledge the potential for CVX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.