Business · Finance

Chevron and Occidental Petroleum: Analyzing Dividend Safety Amidst Energy Volatility

A comparison of Chevron and Occidental Petroleum's dividend safety reveals differing financial metrics and historical commitments, particularly in the context of fluctuating oil prices.

News AutomationCompiled 11:08 UTC · 1 min read

A person examines financial charts displaying stock performance of energy companies.

1 sources

Pipeline ingest

3 reads

Positive / Neutral / Negative

0 countries

Related coverage

Key Points

Chevron and Occidental Petroleum are both large energy companies.
Occidental Petroleum has a trailing 12-month payout ratio of 30%, compared to Chevron's 66%.
Chevron has a stronger balance sheet and a better dividend history.
10 stocks we like better than Occidental Petroleum ›

Chevron (CVX +1.05%) and Occidental Petroleum (OXY-0.12%) both operate in the energy industry. Chevron offers investors a well-above-market 3.5% yield as of this writing. Oxy's yield is 1.9%, which is still higher than the 1% or so you'd get from the S&P 500 index (^GSPC-0.25%), but clearly not as high as Chevron's yield. But is Oxy's lower yield a safer bet if dividend consistency is important to you? Here's what you need to know.

The basics of the oil industry have to be addressed

The geopolitical conflict in the Middle East has disrupted the energy market, leading to volatile oil and natural gas prices. Supply has been constrained, pushing up the prices of these commodities. That said, news flow and investor sentiment have led to material volatility in energy markets. Uncertainty is high.

A person turning valves on an energy pipeline.

Image source: Getty Images.

While this feels like a unique situation, and it is in some ways, volatility is fairly normal for the energy sector. Oil prices rise and fall frequently and often dramatically. So, as a dividend investor, you need to consider the entire energy cycle when you look for a dividend stock.

Oxy looks good right now

The typical metric that investors use to assess dividend safety is the dividend payout ratio. This measure compares dividends to earnings, which makes a lot of sense. If a company earns more than it pays out in dividends, then the dividend should be secure. Oxy's trailing 12-month dividend payout ratio is roughly 30%. Chevron's is about 66%.

From this perspective, Oxy's dividend is safer. But oil prices are relatively high right now. Go back a single quarter, and the numbers were dramatically different. Both companies had payout ratios above 100%. That's the type of volatility that can occur in the energy sector, which is why earnings aren't the best measure of a dividend's safety. In a cyclical industry like this, the board of directors' commitment to the dividend is the key variable.

Chevron Stock Quote

NYSE: CVX

Chevron

CVX Motley Fool Moneyball Superscore: 67 out of 100. Get access to Motley Fool Moneyball. Premium Feature

Moneyball Superscore

67/100

Today's Change

(1.05%) $2.09

Current Price

$201.86

CVX

YTD1w1m3m6m1y5y

PriceVS S&P

Key Data Points

Market Cap

$399BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$199.56 - $202.24

52wk Range

$146.49 - $214.71

Volume

5.3M

Avg Vol

8.5M

Gross Margin

18.48%

Dividend Yield

3.49%

On that front, Chevron wins hands down. It has increased its dividend annually for 38 years. Oxy cut its dividend in 2020 when oil prices plunged during the COVID pandemic. The reason for Oxy's dividend cut, however, is really important to understand.

Where to invest $1,000 right now

When our analyst team has a stock tip, it can pay to listen. After all, Stock Advisor’s total average return is 978% — a market-crushing outperformance compared to 213% for the S&P 500.

They just revealed what they believe are the 10 best stocks for investors to buy right now, available when you join Stock Advisor.

See the stocks ›

*Stock Advisor returns as of August 29, 2026.

Oxy took on more than it could chew

Shortly before the pandemic started, Oxy bought Anadarko Petroleum. Oxy outbid Chevron to win the deal, but it ultimately took on significant debt to complete the acquisition. When oil prices plunged during the pandemic, the company was left with no wiggle room. It had to free up cash by cutting the dividend to focus on debt reduction.

In fairness, Oxy has materially reduced its leverage. Its debt-to-equity ratio has gone from 2x in 2021 to just 0.35x today. The dividend wouldn't be at the same level of risk if oil prices fell dramatically again. However, Chevron's debt-to-equity ratio is an even lower 0.2x. And even during the pandemic, the ratio rose only to 0.37x, roughly where Oxy's debt-to-equity ratio is today.

Occidental Petroleum Stock Quote

NYSE: OXY

Occidental Petroleum

OXY Motley Fool Moneyball Superscore: 64 out of 100. Get access to Motley Fool Moneyball. Premium Feature

Moneyball Superscore

64/100

Today's Change

(-0.12%) $-0.07

Current Price

$59.10

OXY

YTD1w1m3m6m1y5y

PriceVS S&P

Key Data Points

Market Cap

$59BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$58.67 - $59.48

52wk Range

$38.80 - $67.45

Volume

4.4M

Avg Vol

Gross Margin

38.08%

Dividend Yield

1.69%

Which brings up another important factor. Chevron is one of the world's largest energy companies, with a $390 billion market cap. Oxy is big, but with a $59 billion market cap, it is still relatively tiny compared to Chevron. Oxy has more growth potential, as it looks to expand to better compete with the industry's giants. But that aspiration has already proven it can put the dividend at risk. Meanwhile, Chevron has clearly demonstrated that the dividend is a top priority and that it is financially strong enough to support it through the entire energy cycle.

Chevron is the dividend stock to go with here

There is nothing wrong with Oxy. It is a well-run energy company, but it is more growth-oriented. If dividend safety is important to you, history has proven that Chevron is the more reliable income investment. Add in Chevron's higher yield, and it seems like an easy win, even if the dividend payout ratio suggests otherwise.

Should you buy stock in Occidental Petroleum right now?

Before you buy stock inOccidental Petroleum, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the**10 best stocks**for investors to buy now… and Occidental Petroleumwasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $440,710! ** Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!

Now, it’s worth noting_Stock Advisor_’s total average return is978% — a market-crushing outperformance compared to213%for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.

See the 10 stocks ›

*Stock Advisor returns as of August 29, 2026.

Motley Fool issues A.I. buy alert

This tech could reach $80 trillion. Imagine a technology worth over 16 Nvidias.

What in the world could be worth 16 Nvidias? The answer is a radical tech breakthrough that our experts think is transforming every walk of life. And this giant leap forward has many on Wall Street very excited.

Continue ›