Please ensure Javascript is enabled for purposes of website accessibility

Chevron Reveals $75+ Billion Capital Distribution Plan

By Howard Smith - Mar 3, 2020 at 1:27PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The energy giant has the potential to distribute $75 billion to $80 billion to shareholders over the next five years.

Chevron Corporation (CVX 0.96%) held its annual meeting with analysts earlier today. In discussing its five year business plan, chairman and CEO Michael Wirth focused on growing cash flows and maintaining efficient capital spending. 

He specifically pointed to the ability for the company to distribute between $75 billion and $80 billion to shareholders through stock buybacks and dividends, without relying on any increase in oil prices. 

Deep sea oil rig

Image source: Getty Images.

Improving returns on capital

The company is planning on adding nearly $2 billion in returns, mainly from cost reductions and improving margins. Also, by maintaining capital spending near the same $20 billion to $21 billion level where it's been over the prior two years, the company believes it can double adjusted free cash flow per share by 2024. 

Even at steady levels of $60 per barrel oil prices, it expects return on capital of greater than 10% by 2024, an improvement of more than 300 basis points. The company believes its focus to spend capital on lower-risk projects-including in the Permian Basin, Kazakhstan, and potential deepwater projects in the Gulf of Mexico -  will allow it to return more to shareholders. 

In January 2020, the company announced an 8.4% dividend boost, bringing the current dividend yield to approximately 5.3%. Combined with $5 billion in planned annual share repurchases, total shareholder yield comes to more than 7%. To maintain these returns, Chevron sees compound annual energy production growth of greater than 3% through 2024. Combined with this latest capital return plan, Chevron shareholders have a lot to look forward to going forward.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Chevron Corporation Stock Quote
Chevron Corporation
CVX
$178.28 (0.96%) $1.69

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
356%
 
S&P 500 Returns
124%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.