While seeing stocks increase in value is always welcome, that’s just one part of potentially earning money in the stock market. Many investors actually accumulate wealth over time by focusing on dividend stocks, which typically provide a reliable income stream.
This approach is particularly relevant for those investing in dividends, as a lot of the investment’s value unfolds over time, with dividends compounding steadily. So, if you’re on the lookout for three dividend stocks that you can confidently buy and hold for the long term, check out Chevron (NYSE:CVX), ExxonMobil (NYSE:XOM), and Enbridge (NYSE:ENB). These companies are definitely established players in the energy sector.
Remember Nvidia back in 2009? An interesting signal seems to be emerging again. In 2009, there was a “double down” signal for Nvidia, a lesser-known chipmaker at that time. Now, a smaller company, just 1/100th of Nvidia’s size, is emitting a similar “full conviction” signal.
Chemical Dive into Chevron’s Operations
Chevron operates as one of the largest fully integrated energy firms globally. They handle everything from finding and extracting their crude oil (upstream) to transporting and storing it (midstream), and then producing everyday products like gasoline and diesel (downstream).
Each segment of their operations comes with its own advantages and potential risks, so they are able to smooth out fluctuations in business, which helps make Chevron a favorite for dividend investors in the energy field.
This year, when Chevron announced a dividend increase, it marked the 39th consecutive year of doing so. Although they haven’t yet reached the status of a Dividend King (a label reserved for companies that have raised dividends for over 50 years), it wouldn’t be too shocking if they hit that milestone in about a decade.
Moreover, Chevron showcases strong financial stability, which means investors can confidently hold onto their shares. They anticipate paying around $14 billion in dividends this year, which is less than the free cash flow they expect to generate.
ExxonMobil: The Giant of Oil
ExxonMobil stands tall as the largest oil company in the U.S., both in market capitalization (approximately $610 billion as of now) and in oil production. The company’s operations span upstream, midstream, and downstream sectors. What really sets ExxonMobil apart from Chevron is its operational footprint and strategic focus.
Chevron’s key advantage lies in the U.S. Permian Basin, while ExxonMobil has made significant strides offshore in Guyana. Moreover, as the largest non-state-owned refiner globally, ExxonMobil pays particular attention to the downstream segment, allowing for diversification without much overlap between the two firms.
ExxonMobil’s dividend yield is the lowest among the three at about 2.8%, yet its stock price appreciation has surprisingly offered the best total return in the last five years. The company’s focus on high-return projects and major acquisitions—like the $64.5 billion purchase of Pioneer Natural Resources—has captivated investors who appreciate ExxonMobil’s aggressive growth ambitions. Its vast scale makes it an attractive dividend stock for the long haul.
Enbridge: A Steady Tollbooth
Unlike the others, Enbridge operates exclusively within the midstream sector. As a Canadian company, it owns one of the biggest pipeline networks in the nation, supplying over 75% of North America’s refineries and transporting one-fifth of the continent’s natural gas.
Enbridge functions much like a tollbooth, charging either volume-based or fixed fees for product transportation through its infrastructure. Some contracts are long-term, and others are based on specific services, but they tend to be insulated from price volatility—whether oil costs $50 or $100 doesn’t change the fees they collect.
With a current dividend yield of 4.9%, Enbridge still falls short of its past average of 6.4% over the last three years. However, this decline is attributed to rising stock prices, not falling dividends, and the company has successfully raised dividends for 31 consecutive years.
This competitive advantage is difficult for rivals to mimic. Regulatory and financial hurdles favor Enbridge, ensuring its long-term viability as a powerful midstream operator.
Is It the Right Time to Buy Chevron Stock?
If you’re considering adding Chevron shares to your portfolio, it’s essential to weigh the following:
Certain analysts have mentioned a selection of 10 top stocks that are currently more appealing for long-term investment, and guess what? Chevron isn’t on that list. Those chosen stocks are positioned for future growth and could deliver noteworthy returns in the coming years.
People often seek insights based on past performance. For example, investing $1,000 in Netflix back in 2004 would have grown to $370,332! Similarly, an investment in Nvidia at that time would now be worth about $1,272,280. As you can see, history can have a way of influencing decisions.
Investors have been drawn to this data due to its impressive track record of consistently outperforming the S&P 500. The investing community pays close attention to this, and it might be wise not to overlook the latest recommendations.
*Note that these prices and projected returns are subject to change over time.
