Chevron vs. ExxonMobil: Which Oil Dividend Giant Is the Better Buy for Income Investors?

Chevron (NYSE: CVX) and ExxonMobil (NYSE: XOM) trace their roots back to the 1800s. At one time, they were part of John D. Rockefeller's Standard Oil. Aside from their longevity, both are among the largest energy companies in the world.

But which one provides the better investment for long-term, dividend-seeking investors? It's time to analyze each one to make the determination.

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Chevron

Chevron is an integrated energy company with upstream and downstream operations. Upstream includes searching for, developing, and producing crude oil and natural gas, while downstream operations encompass refining and marketing crude oil.

Its 2025 adjusted earnings per share fell 27.5% to $7.29, undoubtedly hurt by weaker commodity prices. Brent crude oil averaged $69 a barrel last year, down from $81 in 2024, but it has increased since the end of the year.

Chevron acquired Hess in July, paying a hefty $53 billion price tag. The deal expands the company's geographic reserves in Guyana and the U.S. Bakken, while also allowing Chevron to achieve greater economies of scale and efficiencies.

Management also expects the deal to help increase free cash flow (FCF), or operating cash flow less capital expenditures. Last year, it produced FCF of $16.6 billion. That gave it plenty of cushion to pay the $12.8 billion in dividends.

In January, Chevron's board of directors announced that it would raise March's quarterly dividend by over 4% to $1.78 a share. That makes it 39 straight years with a dividend increase. At the new rate, Chevron's stock has a 3.9% dividend yield. That dwarfs the S&P 500 index's 1.2% yield.

ExxonMobil

ExxonMobil explores and produces crude oil and natural gas. It also generates revenue from selling and transporting these commodities, chemical products, and specialty products. Its 2025 earnings per share, adjusted for certain items, came in at $6.99, down from $7.79 a year ago. But the company's results are sensitive to commodity prices. With the price of crude oil up this year, ExxonMobil could have a better year if that's sustained.

Meanwhile, the company produces plenty of free cash flow, or operating cash flow less capital expenditures. On this basis, it generated FCF of $23.6 billion, which is more conservative than the company's $26.1 billion figure, which subtracts other investments and adds items like asset sales. Even using the lower figure, that provided the company plenty of cushion to pay the $17.2 billion in dividends.

And ExxonMobil prioritizes dividends. The board of directors raised December's payout by 4% to $1.03 a share. That marked 43 straight years with a dividend increase. The shares have a dividend yield of 2.8%.

Making the decision

It's a close call. Investors looking for dividend-paying energy companies will find each one appealing. That's because they have long histories of raising dividends, even during difficult times when commodity prices drop. Each one produces plenty of FCF to continue supporting payouts. However, based on Chevron's higher dividend yield, I'd choose that stock over ExxonMobil's shares.

Lawrence Rothman, CFA 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.