From the imposition of tariffs to the fear of a recession to the escalation of military conflicts around the world, there's been no shortage of catalysts contributing to the wild price fluctuations in energy prices through the first half of 2025. Despite the volatility, the oil benchmark West Texas Intermediate has essentially returned (as of June 19) to the level it was at when 2025 began.
Investors, consequently, have questioned if now's a good time to fuel their portfolios with some energy exposure -- especially with a position with an energy industry stalwart like Chevron (CVX 0.78%).
Image source: Getty Images.
But merely because Chevron, with a market cap of $256.7 billion, is an industry leader -- it's one of the largest energy companies based on market cap, in fact -- doesn't mean that it's a definite buy. Let's try to drill down, therefore, and see if today is a good time to click the buy button on Chevron stock.
Bulls will argue...
Chevron stock advocates will point to a number of points that illustrate why shares of the oil supermajor are so appealing right now. For one, the company operates throughout the energy value chain, which helps mitigate the risk of any one of its businesses -- from exploration and production to refining -- hitting a downturn.
The upstream business is especially robust, and it's expected to continue contributing to Chevron's strong financials. Including the growth of its TCO joint venture in Kazakhstan as well as producing assets in the Permian Basin and Gulf of America, Chevron projects its upstream business will contribute $10 billion in incremental free cash flow in 2026 if oil benchmark Brent Crude averages $70 per barrel, or $9 billion if Brent Crude averages $60 per barrel.
The company's strong free cash flow reinforces another great feature of Chevron stock: the dividend. For 38 consecutive years, Chevron has hiked its dividend higher -- a noteworthy feat since management accomplished this throughout the financial crisis and the challenges of the COVID-19 pandemic. This sincere dedication to rewarding shareholders bodes well for those on the prowl for a resilient passive income play. With a 4.6% forward dividend yield, Chevron stock is certainly attractive, but even more so in light of management's conservative approach: Chevron's payout ratio has averaged 68.4% over the past five years.
Bears will contend...
While there's a lot to like about Chevron stock, not everyone will be eager to fill up on it. Those with a lower threshold for risk, as well as those averse to investing in commodities and enduring downturns in energy prices, will be wary of buying shares.
Although energy prices have rebounded from the lows they touched in April, there's no certainty that they won't plunge again during the second half of 2025. Should energy prices dip, Chevron may be inclined to scale back operations at lower margin projects or not advance growth projects.
Additionally, Chevron management has demonstrated a strong interest in returning capital to shareholders through share buybacks. The company has bought back shares in 18 of the last 22 years, for example, including $15.2 billion in 2024. Some investors balk at the idea of share buybacks as an effective way to return capital to shareholders, preferring to see the cash returned through dividends.
CVX Stock Buyback (Annual) data by YCharts.
Lastly, some will argue that companies with nuclear energy exposure, instead of oil stocks, are a better opportunity right now. With President Trump signing several executive orders in support of reigniting enthusiasm for nuclear energy, stocks in this niche of the energy industry may make a better option for those interested in powerful growth opportunities.
Is now a good time to gas up on Chevron stock?
There are valid arguments to be made by both bulls and bears regarding Chevron stock, but at this point, I'm inclined to side with the bulls. Between its history of resilience during market downturns, steadfast dedication to the dividend, and the fact that shares are reasonably priced -- they're trading at an operating cash flow multiple of 8.6 -- today seems like a great time for investors to click the buy button on Chevron stock.
