Chevron Q4 Earnings: Profits Decline Amid Lower Oil Output, Dividend Hike Offers Silver Lining

Chevron Corporation (CVX), the second-largest U.S. oil producer, reported fourth-quarter earnings below Wall Street estimates on Friday, as weak margins pushed its refining business into a loss for the first time since 2020. Despite the decline in profits, the company offered a silver lining by increasing its quarterly dividend by 5% to $1.71 per share, payable on March 10 to shareholders of record as of February 14, 2025.

Chevron's total earnings for the three months ended Dec. 31, 2024, were $3.24 billion, up from $2.26 billion in the same period last year. However, its adjusted earnings per share of $2.06 missed the Wall Street estimate of $2.11, hit by weak fuel sales in the United States. Profits on fuel sales tumbled across the industry last year, as the post-pandemic demand surge faded and economic activity faltered in the United States and China, the two largest oil consumers.

The company's downstream business lost $248 million in the fourth quarter of 2024, compared with a profit of $1.15 billion in the same period a year ago. Margins softened in both the U.S. and international markets, but weak jet fuel demand aggravated troubles for the Houston-headquartered company's domestic business. U.S. fuel sales fell 3% year-over-year, Chevron said.

While refining struggled, Chevron's oil production held relatively flat in the fourth quarter at 3.35 million barrels of oil equivalent per day (boepd), compared with 3.39 million bpd a year ago.

Despite the earnings miss, Chevron's board of directors approved a 5% increase in the company's quarterly dividend, reflecting the company's commitment to returning cash to shareholders. The new dividend represents an annual yield of about 4.38% based on Thursday's closing price of $156.32, up from 4.17%.

Chevron's dividend hike aligns with its long-term financial strategy of returning cash to shareholders, despite the decline in oil output and profits. The company has a history of increasing its dividend annually, and the recent 5% increase is in line with this trend. This strategy is supported by the company's strong cash flow generation, which allows it to fund both capital expenditures and shareholder returns. Additionally, Chevron's board of directors has stated that the company is committed to maintaining a strong balance sheet and returning excess cash to shareholders.

In conclusion, Chevron's fourth-quarter earnings were impacted by lower oil output and weak refining margins. However, the company offered a silver lining by increasing its quarterly dividend by 5%, demonstrating its commitment to returning cash to shareholders. Despite the earnings miss, Chevron's dividend hike reflects the company's strong cash flow generation and commitment to maintaining a strong balance sheet.