Buy This 4%-Yielding Energy Company For Continued Dividend Growth

The energy price crisis hit oil companies hard in 2016. With crude oil prices crashing to the lowest level in more than a decade, oil companies were - by far - the least interesting investments to Wall Street, which I thought was a mistake. The reason simply was that big, integrated oil and gas companies have survived multiple downturns in the energy markets during their existence as public companies, and were therefore prepared to deal with the 2016 ruckus of lower price realizations. This energy company has managed to protect its dividend during the downturn and is committed to raising the dividend rate over time. A continued recovery in energy prices implies a return to a faster rate of dividend growth. Yield on cost based on todays valuation: 3.85 percent.

Chevron Corp. (NYSE:CVX) has compelling long-term dividend growth potential. While the oil company's shares have fallen off the latest highs, Chevron has managed to protect and even grow its dividend payout during one of the worst energy down markets in decades, and that is all that matters. Management's commitment to growing the payout makes Chevron a buy. If you need any proof to see that Chevron is capable of dealing with the collapse of energy prices, you just have to look at the company's dividend history. While more levered, concentrated upstream companies were pushed to the brink of bankruptcy in 2016, and some companies didn't survive the energy price crisis, Chevron has increased its dividend payout to shareholders.

Source: Seeking Alpha

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