Here's What You Don't Know About Chevron, Today's Best Dow Stock

One of the world's largest oil companies is also one of its most historically significant.

Mar 12, 2014 at 12:16PM

The Dow Jones Industrial Average (DJINDICES:^DJI) has not reacted well to the fifth anniversary of its post-crisis bull market. The index is lower for the third straight day since passing the March 9 anniversary date, and today that decline is being blamed on international concerns -- specifically, the ongoing tensions between Russia and Ukraine (not to mention the rest of Europe and the U.S.) over Crimea and weak economic news out of China. However, a few Dow components remain in the green today, helping prevent an uglier bloodbath. Chevron (NYSE:CVX) is the clear leader in early trading, as it's the only Dow component to post a gain of more than 1% as of 12:15 p.m. EDT.

You probably know a fair bit about Chevron, which is the second-largest oil and gas company in the United States, and the fourth-largest public oil and gas company in the world, according to Forbes. But you might be surprised to know that this supermajor has had a hand in many of the oil industry's most notable milestones. It is, after all, one of the oldest oil companies in the world.

Chevron's earliest corporate ancestor, Pacific Coast Oil, was founded in 1879 in California, and it quickly became the leading oil producer and refiner in the West in the days when petroleum was still primarily used as lamp fuel.

Pacific Coast Oil became part of the Standard Oil Trust in 1900 after losing a fierce competition with John D. Rockefeller's behemoth enterprise. It was folded into Standard Oil of California, a name it would retain until 1984. 

Chevron, as Standard Oil of California, became an independent oil company after the landmark May 15, 1911, legal decision to break up the Standard Oil Trust. It was one of 34 "Baby Standards" created after the breakup, but one of only four that retain any public trace of their original lineage.

Two years after the Standard Oil breakup, Gulf Oil -- which merged with Standard Oil of California in 1984 -- opened the world's first drive-in gas station, a model that helped spread car culture across the country. Within two decades there were more than 100,000 gas stations of this type operating in the United States.

Chevron has paid dividends from its earliest days as an independent company, and some of these were whoppers by our standards. The New York Times compiled a report at the end of 1921 that showed the payment of one 50% special stock-distribution dividend in 1916 and one 33.3% special stock-distribution dividend in 1917, which resulted in an aggregate market value of $178.9 million in 1921. The company's total oil production was 36.7 million barrels for that year, a company record at the time, and profit reached $22.7 million.

If your grandparents had bought 100 shares of Standard Oil of California in 1915 and passed them down to you, you would be sitting on a hoard of at least 20,532 shares today worth roughly $2.4 million, not counting any reinvested dividends. The annual dividends alone on those 20,532 shares would place you in the top 25% of all earners in the United States.

Chevron helped to create Saudi Aramco by becoming the first oil producer to enter Saudi Arabia in 1933. Five years later, Chevron struck oil for the first time in the Middle Eastern state, and a decade later the company discovered the massive Ghawar oil field, which remains by far the largest oil field in the world. The Saudi government began buying into Chevron's Saudi subsidiary (Aramco) in 1973, and took full control of it in 1980. Today, Saudi Aramco is by far the largest company in the world based on the value of its assets, although it remains entirely in Saudi hands.

Chevron has completed two huge mergers in its recent history to become the Big Oil company we know today. The first was a $13.2 billion buyout of Gulf Oil in 1984, which was at the time the largest merger in corporate history. The second was a $45 billion merger with Texaco in 2001.

Chevron has also been involved in two of the most notable gushers in oil-industry history. Texaco (as Texas Co.) was originally formed in 1902 to capitalize on the state's legendary Spindletop oil field, which sprayed nearly 1 million barrels of oil onto the landscape before it was brought under control, and which in 1915 helped propel Texaco to a spot on the Dow before any other oil company. Nine years later, a geyser blew out the Lakeview oil derrick near Los Angeles, spilling roughly 9 million barrels of oil before it could be tamed. Chevron still pumps oil from these oil fields more than a century later.

Chevron first joined the Dow in 1924, and was removed in 1930 only to rejoin in 1932. A second removal in 1999 proved to be a bad decision for the Dow, as Chevron stock more than doubled between that removal and its reinstatement in 2008.

Looking for the next Chevron in America's energy renaissance?
Record oil and natural gas production is revolutionizing the United States' energy position. Finding the right plays while historic amounts of capital expenditures are flooding the industry will pad your investment nest egg. For this reason, the Motley Fool is offering a comprehensive look at three energy companies set to soar during this transformation in the energy industry. To find out which three companies are spreading their wings, check out the special free report, "3 Stocks for the American Energy Bonanza." Don't miss out on this timely opportunity; click here to access your report -- it's absolutely free. 

Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.

The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers