Over the years, Berkshire Hathaway (BRKA +0.21%)(BRKB +0.36%) has routinely owned one of the more valuable stock portfolios around. The portfolio has changed over time, but one staple that has been around since Berkshire first purchased shares in late 2020 is oil giant Chevron (CVX +2.35%).
Chevron is Berkshire’s sixth-largest holding, accounting for 4.5% of its portfolio. As of this writing, the more than 84.3 million shares of Chevron that Berkshire held are worth nearly $16.3 billion. Berkshire apparently believes enough in Chevron to have it represent a decent amount of its portfolio; should you follow suit? If you value stability and consistency, the answer is yes.
Today’s Change
(2.35%) $4.52
Current Price
$196.83
Key Data Points
Market Cap
Day’s Range
$191.54 – $197.55
52wk Range
$146.49 – $214.71
Volume
10M
Avg Vol
9.1M
Gross Margin
15.15%
Dividend Yield
3.55%
An oil titan that’s here to stay
Although Warren Buffett is no longer CEO of Berkshire (Greg Abel is now at the helm), the Chevron investment was mostly his doing. And it makes sense when you think about what Buffett values — a competitive moat, cash flow, and shareholder-friendly management — and what Chevron offers.
Chevron is a fully integrated oil company, so it handles everything from drilling for oil to transporting oil to selling gasoline and diesel at your local gas station. It’s smaller than ExxonMobil in both production and value, but it’s still global and has a stronghold on the U.S. Permian Basin, the largest oil-producing region in the U.S.
Considering the barriers to entry (both capital and regulatory), Chevron’s competitive moat is as strong as you’ll find in the industry. And with the official completion of its Hess acquisition, Chevron now has much more of a presence in the lucrative Guyana region.
Image source: The Motley Fool.
Chevron offers investors a two-for-one
It’s been a good year so far for Chevron’s stock, up over 23% year to date through July 29, but most investors don’t gravitate to Chevron for stock price growth (although it’s appreciated). It’s about its dividend.
Its current yield is 3.7%, more than 3 times the S&P 500 average. And with 39 consecutive years of annual dividend increases under its belt, you don’t have to second-guess the security of the dividend.
Dividends aside, Chevron’s management has committed to increasing shareholder value through share buybacks, which increases the value of current shareholders’ shares. At the end of last year, the company announced plans for share buybacks between $10 billion and $20 billion annually through 2030.
If you’re looking for a consistent income staple for your portfolio, Chevron is a good option. The oil industry can be cyclical, but the long-term appeal of Chevron is as strong as it has been in some time.