It’s the rare oil major that seems built to outlast cycles, keep the dividend flowing, and, as Warren Buffett clearly believes, keep getting stronger.
The yield is about 4.4%, nearly four times what the S&P 500 pays and on paper that looks tempting, but high yields in energy can be a trap. The difference here is Chevron’s payout isn’t balanced on a knife’s edge. It’s rooted in a business model that survived $30 oil so is it time to follow Buffett?
Key Points
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Chevron breaks even at ~$30 oil, runs a balanced upstream/downstream business, and keeps net debt under 15%.
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38 years of hikes, with another $12.5B free cash flow boost expected in 2026 from projects and Hess.
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Guyana’s oil fields and selective energy-transition bets fuel long-term upside, which Buffett backs with $19B.
Oil Business That Can Take a Punch
Oil prices swing around like a drunk boxer. Up on Middle East headlines, down when OPEC overproduces, sometimes both in the same month. Plenty of companies buckle under that pressure.
At roughly $30 per barrel, Chevron breaks even. That’s a level where many rivals are bleeding red ink, shuttering rigs, or scrambling to refinance. Chevron, in contrast, is still generating cash. Last year it churned out $15 billion in free cash flow, more than enough to cover its $11.8 billion dividend bill.
Part of that resilience comes from being “integrated.” It doesn’t just pump oil but refines it, sells fuel, and makes chemicals. When crude collapses, refineries often do well because feedstock is cheaper. That balance has saved Chevron more than once.
Balance Sheet Nobody Talks About
Chevron’s net debt sits below 15%. That’s not only under its own target range of 20%–25%, but also comfortably better than the S&P 500 average, which sits north of 20%.
Why does that matter? Because it gives Chevron room to maneuver when the cycle turns ugly. It can borrow cheaply to keep long-cycle projects moving and then, when oil rebounds, those projects come online at just the right time. It’s a subtle point, but in a capital-hungry industry, that flexibility is gold.
Plenty of oil firms say they’ll “be disciplined” but Chevron’s balance sheet shows it actually is.
Dividend With a Memory
The Board has increased its payout for 38 consecutive years, includes the late-80s oil bust, the Gulf War, the dot-com crash, the 2008 financial crisis, even the chaos of 2020 when oil briefly went negative.
Incredibly, in spite of negative oil prices, Chevron still hiked its dividend. Some rivals, including BP and Shell, were forced to cut their payouts during the last decade. Chevron just kept going.
And it’s done it faster than most of the supermajors, which makes that 4.4% yield a growing income stream.
The Next Leg of Growth
Starting in 2026, Chevron expects to see a jump of about $12.5 billion in annual free cash flow. That’s a direct result of efficiency programs, completed expansion projects, and, most importantly, the Hess deal.
That acquisition added a stake in Guyana’s offshore basin. If you haven’t been following it, Guyana has become one of the hottest oil frontiers in the world. Multibillion-barrel discoveries, breakevens that embarrass rivals, and production ramping into the next decade. Chevron now owns a piece of that.
The Energy Transition Question
Oil demand will face pressure as the world leans toward lower-carbon energy. Chevron isn’t trying to become a solar farm overnight but is picking its spots. Lithium. Carbon capture. Renewable fuels. They’re modest investments for now, but they’re real options that could matter later.
It’s hedging its bets, basically, without sacrificing returns today. That strikes me as a smarter strategy than overcommitting to projects that don’t pay their way.
Why Buffett Likes It
So why does Berkshire Hathaway own nearly $19 billion of Chevron, making it its fifth-largest position? Buffett likes predictability and companies with fortress balance sheets, management teams that allocate capital rationally, and cash flows he can practically set a watch by. Chevron checks all of those boxes.
And let’s not ignore the income. Berkshire pockets more than $800 million a year in Chevron dividends. That’s a serious return stream, and one that looks set to rise. If you’re Buffett, why wouldn’t you own it? And that alone should have you thinking twice about not joining him.