Chevron Has Returned Over $5 Billion to Shareholders for 16 Consecutive Quarters. Is CVX the Ultimate Oil Stock to Own Right Now?

In a year marked by geopolitical tensions and fluctuating energy prices, oil and gas stocks are in the spotlight. Chevron (NYSE: CVX) is up 20% year to date amid the ongoing conflict in Iran and rising oil prices.

These rising prices benefit Chevron, which has consistently demonstrated stellar cost discipline and balance sheet management. The company has a long history of navigating volatility and has consistently rewarded investors, as evidenced by its 39-year track record of increasing its dividend payout.

Over the last 16 quarters, Chevron has returned over $5 billion to shareholders through dividends and stock buybacks. Here's what makes Chevron the ultimate oil stock to own right now.

Chevron is a model of consistency despite its volatile industry

It's been an up-and-down decade for oil and gas companies, starting with supply disruptions due to the pandemic, then the Russian invasion of Ukraine, which threw the oil and gas markets into turmoil. In recent years, prices have receded from those highs but have flared up once again amid the ongoing conflict in Iran.

The oil and gas industry is naturally cyclical, but Chevron has done an excellent job of smoothing out its earnings and riding the ups and downs of the volatile market. The company enjoyed a massive windfall from rising prices four years ago and has steadily returned capital to shareholders since then.

In the first quarter, Chevron returned more than $5 billion in capital to shareholders for the 16th consecutive quarter. Of this total, $3.5 billion was paid in dividends, with the remainder going to stock buybacks.

Its low break-even cost means Chevron can continue to reward shareholders

Chevron has consistently rewarded shareholders thanks to its integrated oil and gas business model, focus on capital and balance sheet discipline, and investments in high-quality assets that help lower its break-even costs.

The company is focused on high-margin assets, such as the Permian Basin and the Gulf of Mexico, and has successfully integrated Hess, giving it a 30% stake in the Stabroek Block, which contains over 11 billion barrels of oil equivalent.

Image source: Getty Images.

These high-quality assets give Chevron a corporate break-even price of $50 per barrel of Brent crude oil. This represents the oil price required for the company to fund its capital expenditures and dividend payouts. The company expects to maintain this low break-even point through 2030.

With Brent crude oil priced at nearly $100 per barrel as of this writing, every dollar flows through to free cash flow, which Chevron can use to continue rewarding shareholders or reinvest in its business.

Don't expect oil prices to fall quickly

Investors are awaiting news on whether the Strait of Hormuz will reopen, but even if it does, it could take time for oil flows to return to normal. That's because damaged ports and infrastructure will need to be repaired, and oil prices will likely remain elevated in the meantime.

The U.S. Energy Information Administration projects oil prices could peak in the second quarter at $115 per barrel and doesn't see prices falling below $90 per barrel until the fourth quarter. This outlook should provide a strong tailwind for Chevron's earnings, and with its track record of returning capital to shareholders, it's a top energy stock to own today.

Courtney Carlsen has positions in Chevron. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.