Thanks in part to elevated oil prices, Chevron has had an amazing year.
Its stock doesn't seem grossly overvalued, either.
Let's play a what-if game. What if you'd plunked $10,000 in shares of energy giant Chevron (NYSE: CVX) a year ago... what would that stake be worth today? Well, the answer is impressive: $15,204 (as of Oct. 21). That's a whopping gain of 52%!
To be even more impressed, note that the S&P 500 index of 500 of America's biggest companies would have turned your $10,000 into $11,629 over the same period. And before you look down on the S&P 500's performance, understand that it reflects a 16.3% gain, well above the long-term average annual S&P 500 gain of close to 10%.
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Obviously, that's not an ordinary performance for a stock, and it's due in large part to elevated oil prices. Here's Chevron's longer-term stock performance:
| Investment Period |
Average Annual Gain |
|---|---|
|
3 years |
13.96% |
|
5 years |
18.03% |
|
10 years |
10.79% |
|
15 years |
7.26% |
Source: Morningstar.com, as of Oct. 2026.
Clearly, anyone investing in Chevron today should have more reasonable expectations for the stock.
Perhaps more surprising is that even after this blowout one-year gain, the stock still seems reasonably valued to slightly overvalued, with a recent forward-looking price-to-earnings (P/E) ratio of 16.5, a bit above its five-year average of 12.7, and a price-to-sales ratio of 2.15, above its five-year average of 1.53. So it's not exactly a screaming bargain, but someone investing in it now and aiming to hold for many years or decades could do well.
Anyone buying now will also enjoy Chevron's dividend, which recently yielded 3.14%. It's a growing payout, too: The total dividend for the year now is $6.98 per share, up from $5.16 in 2020 and $4.29 in 2016.
Chevron has a lot going for it, such as promising investments in Venezuelan oil (despite geopolitical friction in the region) that could potentially double its oil output. It's expanding its operations elsewhere, too, and its refining capabilities give it an edge.
Long-term, income-seeking investors might want to take a closer look at Chevron.
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Selena Maranjian has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.