We recently published a list of 10 Best DRIP Stocks To Own Now. In this article, we are going to take a look at where Chevron Corporation (NYSE:CVX) stands against other best DRIP stocks to own now.
Dividend investing is often regarded as a strategy that rewards patience, as it tends to generate stronger returns over the long term. Those who commit to holding their investments for extended periods are typically the ones who reap the greatest benefits. A major factor behind the success of this approach is the power of compounding. By reinvesting dividends—using those payouts to purchase additional shares—investors can enhance the growth of their portfolios. Rather than taking the dividends as cash, reinvesting them allows for a steady increase in share ownership, amplifying potential returns. Over time, this method has proven to be highly effective. In fact, a report from Hartford Funds highlights that since 1960, reinvested dividends and compounding have accounted for 69% of the broader market’s total return.
READ ALSO: 12 Best Dividend Penny Stocks to Buy According to Hedge Funds
Over the years, analysts have closely monitored the impact of dividend reinvestment and have expressed favorable opinions about its benefits. Steven Greiner, Managing Director of Schwab Equity Ratings at the Schwab Center for Financial Research, supports this approach. He shares the following insight:
“Reinvesting dividends is nearly effortless. Once you set it up—which generally involves simply ticking a box—there’s nothing more to do but sit back and let compounding work its magic. Be aware, however, that companies can reduce or stop paying dividends.”
Steven Greiner’s final point touches on a key concern for dividend investors—the risk of a company suddenly cutting or suspending its dividend payments. No investor wants to be caught in that situation. While many tend to measure success primarily by stock price appreciation, a deeper analysis offers a broader perspective. A study of major global indexes over a 25-year period, ending in March 2018, found that reinvested dividends contributed nearly 3% in additional growth, as reported by Forbes. This underscores the vital role that dividends play in enhancing investment returns beyond just price gains. It serves as a strong reminder that evaluating an investment solely based on stock price movements may offer an incomplete picture. By incorporating dividend reinvestment into the assessment, investors gain a more comprehensive and accurate view of overall performance.
A separate analysis from T. Rowe Price found that over the three decades leading up to 2022, reinvested dividends played a crucial role in market returns, contributing a notable 42.5% to overall gains. The report also emphasized that dividend reinvestment had an even greater impact on a select group of high-performing companies—those that consistently increase their dividends at a rate exceeding the broader market. This effect becomes more powerful over time, as reinvesting a steadily growing dividend further accelerates long-term investment returns.
For long-term investors looking for steady returns, focusing on stocks with strong dividend growth can be a strategic approach. Reinvesting dividends from these stocks allows investors to gradually increase their holdings, leveraging the power of compounding to boost overall returns and steadily grow their wealth.
Our Methodology
To compile this list, we looked through Insider Monkey’s database of over 1,000 hedge funds as of Q4 2024. We specifically chose dividend stocks that provide a dividend reinvestment plan (DRIP) to shareholders. After filtering, we narrowed down the selection to companies with robust and consistent dividend track records. The stocks are ranked in ascending order of the number of hedge funds having stakes in them, as of Q4 2024.
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).
An aerial view of an oil rig at sea, the sun glinting off its structure.
Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 81
Chevron Corporation (NYSE:CVX) produces and markets a variety of premium refined products, including gasoline, diesel, marine and aviation fuels, high-quality base oils, finished lubricants, and fuel oil additives. The company operates five fully owned refineries in the US, which manufacture fuels, base oils, and other essential petroleum-based products. Since the start of 2025, the stock has surged by nearly 7%.
Last month, Chevron Corporation (NYSE:CVX) announced the completion of a $49 billion expansion at Kazakhstan’s Tengiz oil field, one of the world’s largest. This expansion is set to boost production to nearly one million barrels per day by mid-2025. At an oil price of $60 per barrel, the project is expected to generate $4 billion in free cash flow for Chevron this year and $5 billion in 2026.
Chevron Corporation (NYSE:CVX) maintained a strong financial position in FY24, generating $31.5 billion in operating cash flow and $15 billion in free cash flow. The company returned nearly $12 billion to shareholders through dividend payments and repurchased over $15 billion worth of its own shares, continuing its long-standing buyback strategy, which it has executed in 17 of the past 21 years. In January, Chevron raised its quarterly dividend by 4.9% to $1.71 per share, marking its 38th consecutive year of dividend growth, which makes it one of the best DRIP stocks to invest in. The stock has a dividend yield of 4.36%, as of February 23.
Chevron Corporation (NYSE:CVX) reported Q4 2024 earnings of $2.06 per share, missing analysts’ forecasts due to weak margins, which led to its refining segment posting its first loss since 2020. However, the company recorded $52.23 billion in revenue for the quarter, reflecting a 10.7% year-over-year increase and surpassing Wall Street estimates by over $3.8 billion. This growth was fueled by a 7% rise in global production and a 19% increase in US output, both reaching record highs in 2024. Moreover, Chevron generated nearly $8 billion from asset sales last year and ended the year with a solid financial position, maintaining a net debt ratio of 10%.
Overall, CVX ranks 7th on our list of best DRIP stocks to own now. While we acknowledge the potential for CVX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than CVX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
