Chevron (NYSE: CVX) is one of the top dividend stocks in the oil patch. The energy giant has increased its dividend annually for more than 35 consecutive years. It also has boosted its payout faster than the average for the S&P 500 over the last five years.
At current share prices, it offers a high dividend yield. Here's how much you'd need to invest in the oil stock now to receive $1,000 in dividend income each year.
Chevron hiked its dividend by 8% earlier this year, pushing the quarterly payout to $1.63 per share ($6.52 annually). With the stock closing Thursday just below $162 per share, that gives it roughly a 4% yield. That's several times higher than the S&P 500's average dividend yield, which was recently around 1.3%.
At that payout rate, you'd need to own 154 shares of Chevron to collect just over $1,000 of annual dividend income. If we use $162 as the share price, you'd need to invest about $24,950 into Chevron to collect about $1,000 of dividend income each year.
That could be a lot of money for you to invest, depending on your portfolio size. However, it's a lot less than the $77,000 you'd need to put into an S&P 500 index fund to produce the same amount of dividend income.
Another factor to consider is Chevron's growth. The oil company has increased its dividend at a faster pace than the average for the S&P 500 over the last five years. That trend could continue. Chevron expects to grow its free cash flow by more than 10% annually through 2027 (assuming an average oil price of around $60 a barrel). It could do even better if crude prices are higher and it closes its Hess acquisition. Chevron's growth and higher yield make it an excellent option for income investors.
Should you invest $1,000 in Chevron right now?
Before you buy stock in Chevron, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Chevron wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $741,989!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
See the 10 stocks »
*Stock Advisor returns as of July 15, 2024
Matt DiLallo has positions in Chevron. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.
Want $1,000 in Dividend Income? Here's How Much You'd Have to Invest in Chevron Stock was originally published by The Motley Fool