Chevron Stock: 3 Reasons to Buy Now for Long-Term Growth and Dividend Income

Chevron is poised for a significant free-cash-flow surge due to investments in key regions and the acquisition of Hess. The company has a strong dividend track record, with 38 consecutive years of increases and a yield of 4.5%. Chevron is also investing in lower-carbon energy businesses, providing long-term growth potential.

Chevron (NYSE: CVX) is poised for a significant free-cash-flow surge due to investments in key regions and the acquisition of Hess. The company has a strong dividend track record, with 38 consecutive years of increases and a yield of 4.5%. Chevron is also investing in lower-carbon energy businesses, providing long-term growth potential.

Chevron's recent investments and acquisitions have positioned the company for substantial free-cash-flow growth. The company has invested heavily in recent years to expand its output in several key regions, including the Future Growth Project in Kazakhstan, projects in the Gulf of Mexico, and the continued development of its Permian Basin position. These projects are expected to drive a $10 billion improvement in Chevron's free cash flow next year [1].

Moreover, Chevron's acquisition of Hess has further enhanced its free-cash-flow growth outlook. The deal is expected to add another $2.5 billion to its free-cash-flow total next year, partly due to anticipated annual cost savings of $1 billion by year-end. This acquisition, along with Chevron's other strategic investments, is set to fuel free-cash-flow growth into the 2030s [1].

Chevron's dividend track record is impressive, with 38 consecutive years of increases, making it one of the best dividend-paying stocks in the oil patch. The company's dividend currently yields about 4.5%, more than triple the S&P 500's level. With its cash flow set to surge next year and expected to grow into the next decade, Chevron is well-positioned to continue delivering above-average dividend growth [1].

In addition to its strong financial position, Chevron is also investing in lower-carbon energy businesses. The company expects to dedicate $1.5 billion to initiatives aimed at reducing the carbon intensity of its operations and expanding its new energy business by 2025. This investment includes renewable fuels, hydrogen, and carbon capture and storage. For example, Chevron recently completed a project that expanded production at the Geismar renewable diesel plant from 7,000 to 22,000 barrels per day [1].

Chevron's strategic shift to profit-focused growth over volume expansion is evident in its 2025 strategic reinvention blueprint. The company has committed to maintaining a 1 million barrels of oil equivalent per day (BOE) plateau in the Permian Basin for the rest of the decade. This focus on operational efficiency and low-cost production allows Chevron to generate consistent free cash flow even at $70/bbl oil, contrasting sharply with peers still chasing volume growth at the expense of margins [2].

In conclusion, Chevron's strategic investments, acquisitions, and focus on lower-carbon energy position it as a compelling investment for income-seeking investors and those looking for long-term growth potential. The company's strong financial position, impressive dividend track record, and commitment to sustainability make it a buy-and-hold energy sector anchor [2].

References:
[1] https://finance.yahoo.com/news/3-reasons-buy-chevron-stock-100400637.html
[2] https://www.ainvest.com/news/chevron-2025-strategic-reinvention-blueprint-energy-sector-dominance-growth-era-2508/