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Why Chevron Stock Jumped Friday

Motley Fool - Fri Feb 2, 11:27AM CST

The stock of energy giant Chevron(NYSE: CVX) popped Friday morning after the company reported its fourth-quarter and full-year 2023 results. Chevron shares jumped as much as 3.3%. As of 11:35 a.m. ET, shares were still higher by 3%.

The company's shares have lost more than 12% over the last year, but investors are having a positive reaction to an earnings beat and dividend increase today.

8% dividend boost

Chevron reported earnings of $2.3 billion for the fourth quarter. Its adjusted earnings of $3.45 per share beat expectations for $3.19 per share. That's a drop in earnings sequentially from the third quarter and compared to last year's fourth quarter. What many investors are likely happiest about, though, was the company's announcement that it would be raising its annual dividend by a healthy 8%.

Many investors in energy companies like Chevron count on the income provided by the dividend. And while earnings declined from the third quarter, the company's free cash flow jumped from $5 billion to more than $8 billion. That keeps investors confident that Chevron is in a good place to continue paying, and raising, dividends. Overall cash returned to shareholders in 2023 through stock buybacks and dividends totaled more than $26 billion. That was 18% higher than in 2022.

Record annual production

Chevron also increased oil and gas production in the U.S. by 14% in 2023. CEO Mike Wirth summed up the year for investors, stating "In 2023, we returned more cash to shareholders and produced more oil and natural gas than any year in the company's history."

Chevron's other big news last year was its plan to acquire rival Hess in a $53 billion deal. The company plans for those additional assets to improve its long-term performance. Chevron's dividend yield is now 4.3% annually, and a successful integration of Hess would bode well for the future of the stock, too.

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Howard Smith 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.

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