Predicting Prime Investment in 2025: ExxonMobil or Chevron?
With natural gas prices skyrocketing by 20% in a single day, the energy market is shaking things up. While this volatility is common in the sector, it can make it hard to pick the right stock for the long haul. For investors looking ahead to 2025, integrated energy giants like ExxonMobil (XOM) and Chevron (CVX) are likely your best bet.
Here's why Chevron might be the better choice:
The benefits of integration
The energy sector is a rollercoaster due to the volatile nature of energy prices. But integrated energy companies, like Exxon and Chevron, have the advantage of exposure to various segments of the industry. While oil and natural gas prices drive financial results, having a hand in the midstream and downstream segments helps to soften the blow during market downturns.
Dividends that keep going up
Exxon and Chevron share a commitment to their investors. Both companies have an impressive track record of increasing their dividends annually. However, Chevron takes the cake with a longer streak, now at 37 years, surpassing Exxon's 42-year streak. But that's not all – Chevron also offers a higher dividend yield of 4.5%, which may be appealing to income-focused investors.
A higher yield with Chevron
While Exxon's dividend streak is lengthy and impressive, its yield is lower, hovering around 3.7%. Chevron's yield, on the other hand, provides a more substantial bump for investors, making it a possible attractive option for income-focused portfolios.
Temporary headwinds at Chevron
Comparing both companies yields some reasons for investing in Chevron over Exxon. However, Chevron currently faces some challenges, such as a lower return on capital employed and a pending acquisition with Hess that's being held up due to business relationships with other companies.
Despite these setbacks, there's a good chance that Chevron's long history of success, financial strength, and diversified business model will eventually allow it to navigate through its current struggles. Even if the Hess deal falls through, Chevron has the financial strength to pursue other acquisition opportunities.
In the end, both Exxon and Chevron have their merits, but the potential for higher dividend yields and long-term growth makes Chevron a compelling choice in the energy sector for 2025. However, as always, each investor should consider their financial goals and risk tolerance before making decisions.
In the realm of finance and investing, the expected volatility of energy prices in 2025 might necessitate careful selection of stocks. Integrated companies like ExxonMobil and Chevron, such as Chevron with its scheduled acquisition with Hess, can provide a certain level of resilience during market valleys.
Chevron's strong commitment to its investors is evident in its impressive 37-year streak of annual dividend increases, surpassing Exxon's 42-year streak. This consistency, paired with a higher dividend yield of 4.5%, makes Chevron an appealing option for income-focused investors.
Despite temporary setbacks, like a lower return on capital employed and hold-ups in its acquisition with Hess, Chevron's historical success, financial strength, and diversified business model give it a good chance to overcome these challenges. With its ability to explore other acquisition opportunities, Chevron's potential for growth remains significant in the energy sector for 2025.
As with any investment, it's crucial to consider individual financial objectives and risk tolerance before making decisions, ensuring the chosen investment aligns with personal financial profiles.
