7 Best Stocks to Buy for Passive Income

3. Chevron Corporation (NYSE:CVX)

Number of Hedge Fund Holders: 64

Dividend Yield as of September 16: 4.64%

Chevron Corporation (NYSE:CVX) is a Texas-based multinational energy company that specializes in oil and gas. As an integrated energy company, its operations span the entire energy sector, including oil and natural gas production (upstream), energy transportation (midstream), and chemicals and refining (downstream). Each of these segments tends to perform differently at various times. For instance, the downstream segment often benefits from lower oil and gas prices, which negatively affect the upstream. Meanwhile, midstream pipelines generate stable cash flows throughout the energy cycle. Chevron’s diversified operations help cushion the natural highs and lows of the volatile energy sector.

Chevron Corporation (NYSE:CVX) reported strong earnings in the second quarter of 2024. The company generated over $51 billion in revenues, which showed a 4.7% growth from the same period last year. It boasts one of the strongest balance sheets among its peers, with a debt-to-equity ratio of around 0.15, which is low for any business. What’s most significant, however, is that this gives Chevron the financial flexibility to take on more debt during industry downturns, allowing it to maintain support for its operations and dividends. Its payouts are also supported by strong cash flow generation. In the most recent quarter, the company reported an operating cash flow of $6.3 billion and its free cash flow was $2.3 billion.

Chevron Corporation (NYSE:CVX) remained committed to its shareholder obligation, returning $6 billion to investors through dividends and share repurchases in Q2 2024. This marks the ninth consecutive quarter in which over $5 billion has been returned to shareholders. On August 2, it declared a quarterly dividend of $1.62 per share, which was in line with its previous dividend. Overall, the company has been rewarding shareholders with growing dividends for the past 37 consecutive years, which makes CVX one of the best stocks to buy for passive income. The stock has an impressive dividend yield of 4.64%, as recorded on September 16.

At the end of June 2024, 64 hedge funds owned stakes in Chevron Corporation (NYSE:CVX), up from 62 in the previous quarter, as per Insider Monkey’s database. These stakes have a total value of over $22.4 billion. Warren Buffett’s Berkshire Hathaway owned the largest stake in the company in Q2.