Chevron Corporation (CVX): A Cornerstone of Value in Ken Fisher’s Diversified Portfolio

Chevron Corporation (CVX) has long been a stalwart in the energy sector, but its inclusion in Ken Fisher’s portfolio—specifically as a "low volatility stock to buy"—spotlights its role as a value-driven, income-generating anchor in a market dominated by tech and AI hype. With a $2.88 billion stake in Fisher’s holdings as of Q4 2024, Chevron’s presence underscores a strategic balancing act between growth and stability.

Fisher’s Portfolio Strategy: Value Over Volatility

Ken Fisher, renowned for his emphasis on low-volatility, dividend-paying stocks, has positioned Chevron as the 6th-largest low-volatility holding in his portfolio. The stock’s beta of 0.93—below the market’s 1.0 benchmark—aligns with Fisher’s focus on capital preservation. This defensive tilt is critical in an era of geopolitical tension and macroeconomic uncertainty.

Chevron’s 4.15% dividend yield further reinforces its appeal as a "bond alternative" in a low-interest-rate environment. Fisher’s portfolio also prioritizes companies with strong cash flows and consistent earnings, both of which Chevron delivered in 2024. The firm reported $3.2 billion in Q4 net income, a 39% jump from 2023, driven by 7% global production growth and record shareholder returns of $27 billion via dividends and buybacks.

Performance and Analyst Backing

Goldman Sachs reaffirmed Chevron’s “Buy” rating in Q4 2024, citing its Tengiz oil field expansion in Kazakhstan, Permian Basin output growth, and Gulf of Mexico projects as catalysts for $10 billion in additional free cash flow by 2026. This optimism is reflected in Chevron’s stock price, which has outperformed the S&P 500 by 12% over the past year despite broader market volatility.

Why Chevron Fits Fisher’s Model

1. Low Volatility, High Dividends: Chevron’s combination of stability and income generation fits Fisher’s criteria for core portfolio holdings.
2. Operational Resilience: Even as oil prices fluctuate, Chevron’s cost discipline and asset quality have maintained margins.
3. Geopolitical Hedge: Energy stocks like Chevron act as a natural hedge against supply shocks, a critical consideration amid conflicts like Ukraine and Middle East tensions.

Risks and Counterarguments

Critics argue that Chevron’s reliance on fossil fuels faces long-term risks from the energy transition. Fisher acknowledges this but argues that global demand for oil and gas will remain robust through 2030, citing developing economies’ growth and the physical limitations of renewables.

Conclusion: Chevron as a Core Energy Holding

Chevron’s inclusion in Fisher’s portfolio is no accident. With a $2.88 billion position representing 1.17% of a $247 billion portfolio, it serves as a low-risk, high-yield anchor in a high-volatility market. Key data points reinforce this thesis:

• Dividend Safety: Chevron’s payout ratio of 38% (well below the 50% threshold for sustainability) ensures dividends can weather price swings.
• Free Cash Flow Growth: A 12% capital returns yield target by 2026 signals confidence in long-term profitability.
• Institutional Backing: 81 hedge funds hold CVX, reflecting broad institutional confidence in its stability.

While AI stocks like NVIDIA (NVDA) or AMD (AMD) dominate headlines, Chevron’s 4.15% yield and 0.93 beta offer a critical counterbalance. Fisher’s portfolio—mixing tech growth with energy resilience—highlights that value investing remains a cornerstone of prudent wealth building.

In a market where volatility is the norm, Chevron’s steady performance and Fisher’s strategic weighting make it a compelling long-term hold. As Fisher himself notes, "The best portfolios aren’t built on chasing trends—they’re built on owning what you can’t live without." For energy, that’s as true as ever.