Warren Buffett Made a Bigger Bet on Chevron Stock: Is It a Good Investment?
Billionaire Warren Buffett’s investment firm, Berkshire Hathaway, increased its position in U.S.-based multinational oil and gas company, Chevron Corporation, according to BH’s most recent financial report.
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The purchase brought BH’s Chevron stake up to more than $19 billion, the firm’s fifth-largest public equity holding, according to Forbes.
Buffett has previously voiced his preferences for dividend-bearing companies that produce necessities, which makes Chevron a natural fit. The purchase of more than 15 million shares followed a sell-off of roughly 13 million shares, with these actions occurring in the last half of 2023.
In total Buffett sold more than 50 million shares in the first three-quarters of 2023, buying back 15.8 million in the last quarter and making Chevron one of the firm’s most highly traded stocks. In general, Buffett subscribes to a “buy-and-hold” philosophy.
In Q4 2023, Chevron merged with fuel company Hess in a $53 billion deal. Buffett’s purchase could indicate his approval of the deal. Above all else, it’s likely Buffett sees Chevron as a value play. Chevron has proven it can do well even when the prices for crude oil drop, noting in its fourth-quarter earnings call it can cover capital expenditures and dividends even if Brent crude drops to the low-$50 range.
According to Financhill, Chevron has what Buffett looks for in an investment:
4.4% dividend
Low debt-to-equity ratio
High profitability
Other investors agree. Based on the views of 16 analysts, Chevron earned a “Strong Buy” rating at Tipranks.com, with 12 rating the stock a “buy” and four calling it a “hold.” Right now, Chevron is trading at just over $156. It has an average price target of nearly $182, with a high of $203 and a low of $148.
Even so, what’s right for Buffett and expert analysts may not be the right financial choice for you. For instance, if you prefer not to support big gas and oil companies, with an eye toward sustainable investing and ESG stocks, then buying Chevron wouldn’t be the right decision at any price.
On the other hand, if you’re looking for a dividend-earning stock with solid growth potential in the long-term, Chevron could be a good addition to your portfolio.
Keep in mind, it’s always best to speak with a financial advisor before making any investment decisions. They can help you create a personalized plan that fits your financial goals and risk tolerance.
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