Chevron & Exxon: Navigating Declines in 2025—Which Energy Giant Offers the Better Opportunity?

The energy sector faces headwinds in 2025, with Chevron (CVX) and Exxon Mobil (XOM) both seeing their stocks decline year-to-date (YTD) as of May 2025. Chevron’s shares fell 6.6% from $145.10 to $135.50, while Exxon dropped 2.9% from $106.36 to $103.27. But beneath these numbers lie diverging fundamentals, strategic challenges, and opportunities. Let’s dissect the performance of both giants and determine the best path forward for investors.

Chevron: The Struggles of a Dividend Champion

Chevron’s YTD decline reflects both operational and market-driven headwinds:
1. Slumping Earnings: Q1 2025 net income dropped 36% year-over-year to $3.5 billion, with adjusted EPS of $2.18. A $175 million net loss from UK tax changes and currency headwinds exacerbated the decline.
2. Hess Acquisition Delays: Chevron’s $5.5 billion Hess acquisition, aimed at boosting production, faces regulatory and logistical hurdles, casting doubt on near-term growth.
3. Dividend Strength vs. Market Skepticism: Chevron’s 4.5% dividend yield (vs. Exxon’s 3.7%) attracts income investors, but its stock has underperformed despite this.

Exxon’s Resilience Amid Volatility

Exxon’s smaller YTD decline masks robust operational performance:
1. Strong Earnings Consistency: Q1 2025 net income of $7.7 billion (down 6% YoY) still outperformed Chevron, with a three-year total shareholder return CAGR of 17%, industry-leading.
2. Debt Discipline and Shareholder Returns: Exxon maintained a low 12% debt-to-capital ratio and returned $9.1 billion to shareholders in Q1 via dividends and buybacks.
3. Strategic Cost Efficiency: Cumulative cost savings of $12.7 billion through Q1 2025 underscore operational excellence.

Key Comparisons: Where Each Stands

Metric	Exxon (XOM)	Chevron (CVX)
YTD Return (Jan 2–May 5, 2025)	-2.9%	-6.6%
Dividend Yield	3.7%	4.5%
3-Year TSR CAGR	17%	8.03% (past decade)
Debt-to-Capital Ratio	12%	20%
Q1 2025 Net Income	$7.7B	$3.5B

Why Are Both Stocks Down?

The declines stem from sector-wide pressures:
1. Oil Price Volatility: Brent crude averaged $80/barrel in early 2025, down from $95 in late 2024, squeezing margins.
2. Geopolitical Risks: The Gaza war and Middle East tensions introduced uncertainty, dampening investor sentiment.
3. Market Rotation: Growth-focused investors shifted toward tech and renewables, sidelining traditional energy plays.

The Investment Decision: Chevron or Exxon?

Chevron: Hold for Dividends, but Mind the Risks

• Pros:
• Higher dividend yield (4.5%) supports income portfolios.
• Diversified operations, including the newly operational Ballymore field in the Gulf of America.
• Cons:
• Slowing earnings and delayed M&A activity may prolong underperformance.
• Higher debt (20% vs. Exxon’s 12%) limits flexibility.

Exxon: A Better Buy for Long-Term Growth

• Pros:
• Stronger earnings consistency and shareholder returns.
• Robust balance sheet and cost discipline position it to thrive in volatile markets.
• Outperformed Chevron in 12-month returns (21% vs. 16.9%).
• Cons:
• Lower dividend yield may deter income-focused investors.

Conclusion: Prioritize Exxon for Growth, Chevron for Dividends (With Caution)

Investors face a clear trade-off:
- Exxon is the better buy for long-term growth. Its operational excellence, shareholder-friendly policies, and outperformance in recent years make it a safer bet in a volatile sector. The stock’s 17% three-year TSR CAGR and lower debt suggest it can navigate energy market cycles better than Chevron.
- Chevron retains value for dividend seekers but demands patience. Its 4.5% yield offers income, but investors should monitor the Hess deal’s progress and earnings recovery. A rebound in oil prices could unlock value, but risks remain.

Final Call:
- Aggressive Growth Investors: Overweight Exxon for its superior fundamentals and growth trajectory.
- Income Investors: Hold Chevron for dividends but set strict stop-losses.
- All Investors: Monitor oil prices () and geopolitical developments closely.

The energy sector’s 2025 slump isn’t permanent. For those willing to look past short-term noise, Exxon emerges as the stronger pick, while Chevron requires a higher risk tolerance.