We recently compiled a list of the 7 Cheap Quarterly Dividend Stocks to Invest in. In this article, we are going to take a look at where Chevron Corporation (NYSE:CVX) stands against the other cheap quarterly dividend stocks.
Growth stocks are typically seen as companies with the potential to outperform the market in the future, even if they are currently unprofitable or trading at high valuations. While they offer the possibility of substantial returns, they also come with significant risks. In contrast, value stocks tend to perform well when the broader economy is expanding. These are well-established companies with consistent profits, many of which pay dividends. Investors are drawn to them because they are often perceived as undervalued relative to their true worth. Sectors like banking, utilities, and healthcare fall into this category. Historically, value stocks have outpaced growth stocks for much of the market’s history, but that trend has reversed over the past decade.
Over the past five years, the growth stocks in the Vanguard Fund have surged approximately 111%, with much of the increase occurring after the fourth quarter of 2022. This momentum was largely driven by major tech firms introducing artificial intelligence products and services, which accelerated earnings growth and lifted valuations. Meanwhile, value stocks have struggled to keep pace. Since late 2022, the value stocks in the Vanguard Fund have lagged behind its growth-focused counterpart and have gained only 48% over the past five years. In theory, this gap suggests value stocks could eventually rebound. Many of these companies continue to generate profits and return a portion to shareholders, so at some point, buyers may step in, pushing their performance closer to historical norms.
By the end of 2024, the value fund was trading at around 16 times its projected earnings for the year, significantly lower than the growth fund, which was valued at approximately 27 times earnings. This represents a roughly 40% discount, compared to the average 30% gap over the past decade, according to Barron’s analysis of FactSet data. This valuation gap makes value stocks look more appealing. If these companies deliver earnings in line with or above analysts’ expectations, they could demonstrate to the market that they are worth more than their current prices suggest, potentially leading to strong stock performance.
Also read:
15 Best Monthly Dividend Stocks To Buy Right Now
As noted earlier, value stocks are often associated with dividend payments. These stocks typically offer higher dividend yields and stronger fundamental ratios compared to growth stocks. When it comes to dividend investing, dividend growth plays a crucial role. The Dividend Aristocrats Index serves as a key benchmark for dividend-focused strategies, tracking companies that have increased their payouts for at least 25 consecutive years.
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