Chevron: A Rather Sticky Situation

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Chevron (CVX +1.30%) is currently perched, rather precariously, near its all-time high. It’s been a jolly good year so far, up a good 21.6% as we speak. The energy lot are booming, you see, thanks to oil prices doing a little jig and a general air of uncertainty amongst the sensible folk. Some investors, bless their cotton socks, are heading for anything solid, anything that won’t be swallowed whole by these newfangled Artificial Intelligences. Oil and gas, being rather… substantial, seem to fit the bill.

At around $185 a share, Chevron is knocking on the door of $200. But some are getting the jitters, worried it’s climbing a bit too fast. Like a beanstalk, really. And we all know what happened to the giant at the top of that one.

Let’s have a proper look, shall we, and see if this stock is still worth a nibble, or if it’s about to tumble down the hill.

Chevron’s Little Growth Spurt

Chevron is attempting to be a bit clever, investing in all sorts of things like hydrogen (which is mostly just air, if you ask me), carbon capture (stuffing the smoke back down the chimney, naturally), and renewable fuels. But let’s not be fooled. The vast majority of their riches still come from digging up the black stuff and selling it to anyone daft enough to buy it.

To avoid a nasty surprise when the oil price decides to take a nap, Chevron has been rather industrious, reducing production costs with clever gadgets and focusing on projects that actually work. They boast, and quite proudly, that they can now keep the lights on – and the dividends flowing – even if the oil price dips to a measly $50 a barrel. It’s like a squirrel burying nuts, really. A very large, very oily squirrel.

In 2025, they handed out $12.8 billion in dividends (a truly monstrous sum!), spent $17.3 billion on building things (more digging equipment, no doubt), and still managed to squirrel away $16.5 billion in free cash flow. This is particularly impressive considering the oil price was lower than a badger’s belly in 2025.

Even if the oil price decided to take a plunge below $50, Chevron could simply tighten its belt, cut back on the fancy toys, or rely on its rather bulging pockets. They finished 2025 with a tidy balance sheet, meaning they had enough cash to cover their debts. Even after splashing out on Hess, the greedy fellow.

Chevron’s production has gone up from 3.34 million barrels a day to 3.72 million. The Hess acquisition and all that digging in Guyana and Venezuela should keep the money flowing. They’re even sniffing around an oilfield in Iraq, which is always a bit of a gamble, like betting on a snail race.

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A Balanced Buy for Those Who Like a Steady Income

With oil prices bobbing along above $70 a barrel, Chevron is in a rather splendid position to rake in the cash in 2026. They’ve got a comfortable cushion between the current price and their break-even point, which is always a good thing.

Chevron has been, arguably, undervalued for years. So even after this little climb, it still looks like a decent bargain when you compare the price to its earnings and cash flow. Especially considering earnings are likely to be much fatter in 2026.

It’s not quite as cheap as it used to be, mind you. But with 38 years of steadily increasing its dividend and a 3.8% yield, it remains a solid choice for those who like a bit of regular income. It’s not going to make you a king, but it will keep the wolves from the door. And that, my friends, is a rather good thing indeed.

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2026-02-28 00:54