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Chevron: Stock Buybacks and Steady
Dividend Growth Remain the Primary Appeal

In a recent issue of The Value Line Investment Survey, the Value Line Research Department analyzes the equities that reside in the Petroleum (Integrated), Natural Gas (Diversified), Natural Gas Utility, Oil/Gas Distribution, and Pipeline MLP Industries. Out of all those energy-related stocks, analysts recommended that investors take a look at Chevron (CVX). This equity joined the Dow Jones Industrial Average in 2008.

“Shares of CVX have performed well since their sharp pullback during the COVID-19-related selloff. A resilient operating performance, coupled with the stock’s steady income component, is contributing to the continued investor support,” notes Richard Gallagher, Associate Director, Value Line Research.

“The recent dividend hike suggests management’s confidence in Chevron’s business prospects. Indeed, the company’s operating performance has gotten back on track thanks to higher average price realizations and cost-reduction efforts enacted in 2020, and these strategic actions should drive solid results in the near term. Accordingly, we estimate sales of $14.5 billion and earnings of $5.75 a share for this year, which would represent a sharp rebound from last year’s showings. For 2022, we look for the top and bottom lines to advance to $15 billion and $6.90 a share, respectively. Still, the stock may well be range bound over the coming years, assuming oil prices don’t vary to the extreme. The advent of shale drilling has kept a lid on oil quotations, and the rise of renewable energy will likely affect the trend in petroleum prices over the long term.

“We think this issue holds some appeal even at the current quotation. Stock buybacks and steady dividend growth remain the primary appeal. The company’s good finances (Financial Strength: A) ought to appeal to conservative investors. Still, this equity is ranked to underperform (Timeliness: 4) the broader market over the coming six to 12 months and total return potential to 2024-2026 is uninspiring. All told, investors with a desire for steady, above-average income are encouraged to take a look here.”

Editor’s Note: The Value Line Investment Survey covers approximately 1,700 of the most actively traded stocks in more than 90 industries, representing about 90% of the total U.S. stock market capitalization. The proprietary Ranking System makes it simple to tell whether or not a particular stock is a worthwhile investment. Value Line offers a broad array of investment research services. To find The Value Line Investment Survey package that's right for you visit www.valueline.com.

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