Chevron: A Financially Strong Oil Major

Chevron is one of the largest integrated energy companies with a diversified global business spanning upstream (production), midstream (pipelines), and downstream (refining and chemicals) segments. This diversification helps mitigate the volatility of the oil industry.

• Chevron's low debt-to-equity ratio of 0.15 is the lowest among its peers, giving it more flexibility to take on leverage during downturns.
• This financial strength has enabled Chevron to increase its dividend for 37 consecutive years, even during oil price crashes.
• Chevron strategically manages its leverage by taking on debt during low oil prices and reducing it when prices recover, preparing for the next downcycle.
• With a generous 4.6% dividend yield, Chevron is an attractive buy when oil prices are weak.

TotalEnergies: Preparing for the Energy Transition

TotalEnergies is an integrated energy company like Chevron, but it has aggressively diversified into the electricity and clean energy sectors, recognizing the growing importance of renewable energy.

• TotalEnergies' "integrated power" business accounts for about 10% of its revenue, a significant shift in a short period.
• Unlike some peers, TotalEnergies maintained its dividend during the pandemic, showing its commitment to shareholders.
• With a 5% dividend yield and a focus on the energy transition, TotalEnergies offers exposure to traditional oil and gas as well as a hedge for the future.

Investing in Energy Stocks

Energy stocks tend to be volatile, rising and falling with oil and gas prices. Investors should consider the following when buying energy stocks:

• Low oil prices often present the best opportunities to buy high-yield oil stocks like Chevron and TotalEnergies.
• Financially strong companies with sustainable business models, like Chevron and TotalEnergies, are better positioned to weather downturns and continue rewarding investors.
• Diversified companies like TotalEnergies, which are preparing for the energy transition, can provide a hedge against potential disruptions in the traditional oil and gas industry.

The Importance of Long-Term Strategy

Investing in energy stocks requires a long-term strategy due to the inherent volatility of the sector. Chevron and TotalEnergies are attractive options for investors seeking high-yield dividend stocks with sustainable business models.

• Chevron's financial strength, diversification, and commitment to dividends make it a reliable choice for riding out the oil cycle.
• TotalEnergies' early move into renewable energy sources positions it well for the energy transition while still offering exposure to traditional oil and gas.
• Both companies have proven their ability to navigate industry challenges and continue delivering value to shareholders.