We recently published a list of the 15 Best Dividend Aristocrat Stocks with Over 3% Yield. In this article, we are going to take a look at where Chevron Corporation (NYSE:CVX) stands against other best dividend aristocrats with a high yield.
Dividend Aristocrats are the companies that have raised their payouts for 25 consecutive years or more. Dividends have been an important part of the overall market return for a very long time. According to a report by S&P Global, dividends have represented approximately 31% of the total return of the broader market from 1926 to February 2025, while capital appreciation has accounted for 69%.
Growing dividends consistently highlight the companies’ confidence in their firms’ prospects as market participants see this as a sign of corporate maturity and strong balance sheets. Dividend aristocrats reveal characteristics of both capital growth and dividend income, as opposed to alternative income strategies that mainly pay attention to pure yield or pure capital appreciation.
Investors are more inclined toward dividend growth stocks, and the performance of these equities has also remained stable over the years. According to a report by S&P Global, dividend aristocrats have reported higher returns with lower volatility over the long run as compared to the broader market, which eventually resulted in higher risk-adjusted returns.
In addition to dividend growth, dividend yield is also an important component of total return. The ability to increase dividends does not come at the expense of lower yields; in fact, the dividend aristocrats index has consistently delivered higher yields than its benchmark. The index had dividend yields within the range of 2.0% to 2.8% over the 28-year period, as reported by S&P Global. Moreover, the average dividend yield of the index was 2.5%, compared with a 1.8% dividend yield of the broader market.
As highlighted above, dividend aristocrats have shown lower volatility as compared to the broader market index. Their ability to provide downside protection can be seen in the upside and downside capture ratios. The S&P report highlighted that the dividend aristocrats index has outperformed the market index 66.67% of the time in down months and 43.88% of the time in up months. Notably, the index also has a lower drawdown level compared with the benchmark index. In addition, the dividend aristocrats index provided an average excess return of 0.87% in down months over the broader market. To further emphasize their low volatility, the report mentioned that the dividend aristocrats had a market beta of 0.8 between December 29, 1989, and February 28, 2025.
With the AI boom and tech stocks taking center stage, dividend stocks are somehow overlooked by the market. However, the recent market sell-off has restored their importance, as the Dividend Aristocrats Index has surged by over 2% since the start of 2025, compared with a nearly 5% decline in the broader market. The significance of these equities is much more apparent over long periods of time. According to the S&P Global report, the dividend aristocrats index outperformed its benchmark by an average of 1.59% per year between January 2000 and February 2025. This outperformance was because of the fundamental characteristics of the constituents of the index.
An aerial view of an oil rig at sea, the sun glinting off its structure.
Our Methodology
For this article, we scanned a list of the Dividend Aristocrat index, which tracks the performance of companies that have raised their payouts for 25 consecutive years or more. From that list, we picked 15 stocks with dividend yields above 3%, as of March 29. The stocks are ranked in ascending order of their dividend yields.
At Insider Monkey, we are obsessed with hedge funds. Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Chevron Corporation (NYSE:CVX)
Dividend Yield as of March 29: 4.12%
Chevron Corporation (NYSE:CVX) is a leading American oil and gas company. It has enhanced its capacity to secure long-term contracts by prioritizing LNG initiatives. The company reported solid earnings in the fourth quarter of 2024, generating revenue of $52.23 billion, up 10.7% from the same period last year. The revenue also exceeded Street estimates by over $3.8 billion. The growth in revenue was mainly driven by a 7% rise in global production and a 19% surge in US output, both achieving record levels for the year.
In addition, Chevron Corporation (NYSE:CVX) generated nearly $8 billion from asset sales and maintained a solid financial position, as the company ended the year with a net debt ratio of 10%. The company’s cash position has remained stable over the years, which has supported its dividend policy. In FY24, it reported an operating cash flow of $31.5 billion, and its free cash flow amounted to $15 billion. Due to this cash generation, the company was able to return $12 billion to shareholders through dividends and repurchased over $15 billion worth of shares, reasserting its long-standing commitment to share buybacks.
Chevron Corporation (NYSE:CVX) offers a quarterly dividend of $1.71 per share, growing it by 4.9% in January. Through this increase, the company achieved its 38th consecutive annual dividend hike, which makes CVX one of the best dividend aristocrat stocks on our list. In addition to dividend growth, the stock also offers an attractive dividend yield of 4.12%, as recorded on March 29.
Overall, CVX ranks 4th on our list of the best dividend aristocrat stocks. While we acknowledge the potential of CVX as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued dividend stock that is more promising than CVX but that trades at 10 times its earnings and grows its earnings at double digit rates annually, check out our report about the dirt cheap dividend stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
