We recently published a list of the 10 Best Value Dividend Stocks to Invest in According to the Media. In this article, we are going to take a look at where Chevron Corporation (NYSE:CVX) stands against other best value dividend stocks.
In just a few weeks, investor sentiment has shifted dramatically—from optimism after the elections to concerns about an economic slowdown, and even fears of a possible recession. As of April 21, the broader market had dropped more than 12%, and it’s now down over 16% from its February peak. Though the market is flirting with the bear market territory, analysts note that such declines tend to occur every few years, and while recoveries vary in pace, markets have historically bounced back over time. For context, the last major pullback was in 2022 (−28%), preceded by 2020 (−35%) and 2018 (−20%).
A report by Fidelity Investments pointed out that the current market correction has been both swift and sharp. Encouragingly, when compared to past declines, the downturn seems to have already reached the lower end of the typical range in terms of both depth and speed, hinting that markets might stabilize in the near future.
As stock prices decline, many investors are taking advantage of the dip, aiming to benefit from the ongoing market sell-off. Analysts, for their part, have generally favored value stocks, citing their historically strong performance. A report by Dimensional Fund Advisors supports this view, noting that value stocks—typically those trading at lower relative prices—have consistently delivered higher expected returns than growth stocks in the US market.
The report further mentioned that although there have been periods when value stocks underperformed, the core principle remains unchanged: lower relative prices tend to be linked with better long-term returns. The value premium has often surfaced suddenly and in significant amounts. For instance, in years when value outpaced growth, the average outperformance was close to 15%. Between 1927 and 2023, US value stocks have, on average, delivered an annual return that was 4.4 percentage points higher than that of growth stocks.
Dividend paying companies, in addition to value stocks, are also reliable options in the current market environment. Many reports have highlighted that investors often gravitate toward companies with high dividend yields and low valuation multiples. A report from S&P Dow Jones Indices highlights that the Dividend Aristocrats Index, which tracks the performance of companies with at least 25 consecutive years of dividend growth, offers a balanced mix of both value and growth traits. Since 1999, the index has typically included about 60.5% value-oriented stocks and 39.5% growth-oriented stocks, indicating a neutral stance between the two investment styles.
Analysts emphasized that a portfolio focused on solid dividend yields, steady dividend increases, and dependable payouts remains a timeless strategy. They added that even without depending on shifts in market valuation, the combination of income and its consistent growth could drive nominal gross returns of over 10% per year.
An aerial view of an oil rig at sea, the sun glinting off its structure.
Our Methodology
To compile this list, we thoroughly reviewed reputable sources such as Forbes, Morningstar, Barron’s, and Business Insider. From their latest articles, we gathered the value stocks they collectively favored. From that selection, we picked 10 stocks with forward P/E ratios below 20, as of April 21. These stocks are ranked in descending order of their P/E ratios.
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)
Forward P/E Ratios: 14.62
Chevron Corporation (NYSE:CVX) ranks seventh on our list of the best value stocks according to the media. The American leading oil and gas company has built a strong financial foundation, providing a buffer against extended downturns in the oil and gas sector. The company has taken advantage of robust profits in recent years to reduce its debt load and reward shareholders with dividends and stock repurchases. As of now, it holds just $17.2 billion in net long-term debt, with a notably low debt-to-capital ratio of 13.6%, reflecting a capital structure that relies minimally on borrowing.
Chevron Corporation (NYSE:CVX) delivered solid fourth-quarter results for 2024, posting revenue of $52.23 billion, which showed a 10.7% increase from the same quarter in the previous year and beating analyst estimates by more than $3.8 billion. This growth was largely fueled by a 7% increase in global output and a 19% jump in US production, both setting new records for the year.
Chevron Corporation (NYSE:CVX) also brought in nearly $8 billion from asset sales, maintaining a healthy financial position with a year-end net debt ratio of just 10%. Chevron’s steady cash reserves have supported its dividend strategy over time. For fiscal 2024, the company reported $31.5 billion in operating cash flow and $15 billion in free cash flow. Thanks to this strong cash generation, it returned $12 billion to shareholders through dividends and repurchased over $15 billion in stock, underscoring its continued focus on shareholder returns.
Chevron Corporation (NYSE:CVX) currently offers a quarterly dividend of $1.71 per share and has a dividend yield of 5.11%, as of April 21. The company has been rewarding shareholders with growing dividends for the past 38 consecutive years.
Overall, CVX ranks 7th on our list of the best value stocks that pay dividends. 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.
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Disclosure: None. This article is originally published at Insider Monkey.
