Shares of Chevron Corporation (NYSE:CVX) will begin trading ex-dividend in 2 days. To qualify for the dividend check of $1.12 per share, investors must have owned the shares prior to 17 May 2018, which is the last day the company’s management will finalize their list of shareholders to which they will send dividend payments. What does this mean for current shareholders and potential investors? Below, I will explain how holding Chevron can impact your portfolio income stream, by analysing the stock’s most recent financial data and dividend attributes. View our latest analysis for Chevron

5 questions I ask before picking a dividend stock

When researching a dividend stock, I always follow the following screening criteria:

• Is its annual yield among the top 25% of dividend-paying companies?

• Has it paid dividend every year without dramatically reducing payout in the past?

• Has dividend per share amount increased over the past?

• Is it able to pay the current rate of dividends from its earnings?

• Will it have the ability to keep paying its dividends going forward?

How does Chevron fare?

The current trailing twelve-month payout ratio for the stock is 81.06%, which means that the dividend is covered by earnings. However, going forward, analysts expect CVX’s payout to fall to 66.48% of its earnings, which leads to a dividend yield of 3.59%. However, EPS should increase to $7.46, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. In the case of CVX it has increased its DPS from $2.6 to $4.48 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Chevron produces a yield of 3.45%, which is on the low-side for Oil and Gas stocks.

Next Steps:

Keeping in mind the dividend characteristics above, Chevron is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three important aspects you should further research:

1. Future Outlook: What are well-informed industry analysts predicting for CVX’s future growth? Take a look at our free research report of analyst consensus for CVX’s outlook.

2. Valuation: What is CVX worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether CVX is currently mispriced by the market.

3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.