Better Oil Stock: Chevron (CVX) vs. ExxonMobil (XOM)
Key PointsChevron is smaller, but it’s growing faster and has less downstream exposure.
Chevron (CVX) and ExxonMobil (XOM) are two of the world's largest integrated energy companies, boasting upstream exploration, midstream pipeline, and downstream refinery operations. Over the past year, Chevron's stock has surged by 45%, while ExxonMobil's has climbed 58%. Despite both companies relying heavily on their upstream businesses, Chevron generates more of its profits (80%) from upstream operations compared to ExxonMobil's 70% due to ExxonMobil's larger downstream business.
Chevron's upstream-heavy business model makes it more attractive during oil price spikes, while ExxonMobil's scale and diversification could make it a more compelling investment during price declines. However, both companies' Brent crude oil prices remain far above their respective breakeven prices of $50 per barrel for Chevron and $35 for ExxonMobil.
Both Chevron and ExxonMobil have a history of raising dividends, with Chevron paying a forward yield of 3.2% and ExxonMobil 2.3%. They have both maintained impressive dividend streaks, with Chevron's 39 consecutive years and ExxonMobil's 43. If they reach 50 years, they'll become Dividend Kings. Analysts predict both companies' EPS will grow at a 20-26% CAGR from 2025 to 2028, driven by expansion in Guyana, increased production in the Permian Basin and Kazakhstan, and acquisitions.
Despite the short-term fluctuations in oil prices, Chevron and ExxonMobil are both considered solid long-term investments for investors who can weather the ups and downs. However, the author recommends Chevron over ExxonMobil for three reasons: it has more exposure to rising oil prices, it's growing faster, and it pays a higher dividend.
Written by urgent.news from Motley Fool's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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