Chevron Hikes Its Dividend – However It is Much less Than Anticipated

That is 16.7% larger than the $12.8 billion the corporate paid in 2025 (which included no less than 1 quarter at a decrease $1.63 quarterly DPS fee).

Furthermore, in comparison with the run fee of $3.4 billion paid in This autumn (i.e., $13.6 billion), the $14.24 billion in money dividends can be 4.7% larger. And, the $3.4 billion in This autumn funds took up 80% of the $4.2 billion in adj. FCF. So, a 4.09% enhance in funds (earlier than share repurchases) might enhance that payout ratio.

Which will have an effect on the corporate’s skill to extend its dividend going ahead. 
Because of this, Chevron inventory could possibly be at a near-term peak. Here is why.

I wrote in December that the typical dividend yield for CVX inventory had been 4.2168%. Based mostly on my expectation of a $7.18 annual DPS, I anticipated a worth goal (PT) of $170.21 per share:

$7.18 DPS / 0.042168 = $170.27 PT

However, the common yield 5-yr dividend yield metric is now barely decrease at 4.1833%:

Yahoo! Finance …….. 4.12%

Morningstar …………  4.04%

Searching for Alpha ………  4.39%

Common survey yield: 4.1833%

That decrease yield common might assist push the worth goal larger. Nonetheless, the ahead DPS fee is decrease than the prior expectation, so the brand new PT is barely decrease:

$7.12 DPS / 0.041833 = $170.20

The issue is that CVX inventory is now $176.90, and it has a ahead dividend yield of 4.02% (i.e., $7.12/$176.90).

That might indicate that the worth is overvalued, primarily based on its historic dividend yield common. As well as, it has moved up considerably in a brief interval to this PT.

Furthermore, CVX is now near analysts’ worth targets. For instance, Yahoo! Finance’s survey of 26 analysts is $177.67 per share, Barchart’s imply PT is $175.25, though AnaChart’s survey of 19 analysts is $208.78.

A technique for current shareholders to play that is promote brief out-of-the-money name and put choices, to gather earnings, and probably profit if the inventory stays in a buying and selling vary.

For instance, take a look at the Feb. 27, 2026, expiry interval. The $185.00 name choice strike worth has a midpoint premium of $1.50. That gives a coated name vendor a 27-day yield of 0.85% (i.e., $1.50/$176.90).

This strike worth is +4.578% larger than Friday’s shut (i.e., out-of-the-money or OTM). So the investor might probably make this as an extra capital achieve (though the upside is proscribed to $185.00).

Equally, out-of-the-money (OTM) put choices on this expiry interval have good yields.

The $170.00 put, i.e., with a 3.90% distance away) has a $2.19 midpoint premium, offering a 1.288% yield (i.e., $2.19/$170.00). As well as, the $165 put strike worth (6.73% OTM) has a $1.06 midpoint premium.

Furthermore, an investor might brief the $170.00 put and purchase the $165.00 strike worth put for a web credit score of $1.13. This offers some draw back safety for the put vendor to guard towards any draw back if CVX falls under $165.00.

The online credit score can be $2.19-$1.06, or $1.13, offering a web yield of 0.665% (i.e., $1.13/$170.00). Furthermore, if CVX seems to be steady, the investor might later promote to shut the put choice buy leg to extend the whole return.

The underside line is that utilizing choices methods, current CVX buyers can present some earnings safety in case the inventory is close to a peak.

On the date of publication, Mark R. Hake, CFA didn’t have (both straight or not directly) positions in any of the securities talked about on this article. All data and information on this article is solely for informational functions. This text was initially printed on Barchart.com