Sale CVX

Chevron-LogoAs many of you are aware, the depressed price of crude oil has dropped many of the worlds top oil and gas companies to their knees. This is primarily due to the price of oil being very closely correlated to the earning potential for businesses in this industry. It all started back in mid-2014 where the price of crude oil started dropping. It went from being around $110 per barrel in middle of that year, all the way down to $31 per barrel in January 2016. It was the lowest drop in crude oil for more than 10 years. Since then, the price of crude oil has been slowly recovering and is currently at $47.51 per barrel. Just wanted to touch on a brief history what has happened these last few year to the price of crude oil and you can clearly see the reliance of the price with many oil and gas companies and sectors that are connected within. Here is a great source for keeping track of crude oil price that I personally use.

As much as I hate selling any portion of my dividend income portfolio assets, this one needed to be severed from the rest of the group. I chose to go ahead and sell out of Chevron Inc. (CVX) position entirely, as its fundamentals, growth and future has been greatly diminished. I understand the company is going through a tough patch as many companies in this field are, though I am not willing to wait it out for the company to recover. In my view of things, I know there are better opportunities out there. Here is a few strong reasons why I decided to liquidate my stake of Chevron Inc. (CVX).

  • Straight 8 quarters without dividend raise
  • Payout Ratio is highly unstable
  • High probability of dividend cut
  • High Debt leverage
  • Unknown future for the dividend growth

I sold all 8.257 shares of Chevron Inc. (CVX) for the price of $102.35 lowering my annual dividend income by $35.34.

The 12-month dividend income decreased to $2,558.

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13 Comments

  1. Investment Hunting on May 11, 2016 at 15:01

    Hi Dividend Vet. I sold half of my position in CVX last month, so I understand why you did so. The stock has rebounded slowly so far this year. Were you able to unload at a profit?

    • DividendVet on May 11, 2016 at 16:11

      Hello, I sold the position at a small loss, though it was a fairly a small position to start with, only about 1.3% of my portfolio. Primarily, I am just trying to focus on the longterm constant dividend growth payers that grow as a business, not decrease. It will be interesting what happens with CVX, so far its looking grim.

      Thanks for stopping by!

  2. Tawcan on May 11, 2016 at 15:41

    Interesting move, seems quite a few DGI’s have sold CVX. We’re still holding ours and currently have no plan to sell CVX.

    • DividendVet on May 11, 2016 at 16:17

      I really admire your patience with CVX, though the reason why I sold it should be very clear, I am a dividend GROWTH investor. 🙂

      I really hope the company can turn it around, but I will not sit on my hands to see it.

      Good hearing from you.

  3. Asset Blogger on May 11, 2016 at 15:53

    Hi,

    Does no one hedge their investments as a way to manage risk?

    Regards,
    Asset Blogger
    P.s. nice blog.

    • DividendVet on May 11, 2016 at 16:39

      No, I don’t mess around with derivatives. Cold hard cash in the form of dividends, dollar-cost averaging and diversification is my kind of hedging that I prefer.

      Take care.

  4. Income Surfer on May 11, 2016 at 16:40

    Completely understand Vet. We sold ours a couple weeks ago. I wrote a post about how the company’s cash burn rate scared the hell out of me. In addition to asset sales, they are taking on additional debt, and even issuing additional shares of common stock. I don’t think it will end well, and I’m glad you got out!

    I hope you have a great week
    -Bryan

    • DividendVet on May 11, 2016 at 16:58

      Probably the worst thing is all that debt the company is accumulating, they just can’t keep on paying the shareholders with all that debt forever, something has to give. Also, I read somewhere how they are selling off some of their most profitable assets. Not the type of business I want to be part of.

      Thanks for the scoop!

  5. Captain Dividend on May 11, 2016 at 20:09

    I got cold feet last year and sold my shares, I did however use much of those proceeds to purchase more XOM which I felt was a safer play.

    • DividendVet on May 11, 2016 at 22:48

      I would be much more willing to hold on to XOM, rather than CVX at this point. It is what it is and you have to squash some bugs sometimes, better sooner than later. I hope you got a great deal on XOM at the time.

      Take care.

  6. Dividend Reaper on May 12, 2016 at 09:24

    Vet,

    It’s always tough to sell a piece of your portfolio but sometimes it is very necessary. I had to sell a piece of mine this morning as well but my piece was in Kohl’s (KSS). It’s a good thing to do no matter how you write it up. Sometimes things just have to be sold.

    -Dividend Reaper

    • DGI portfolio manager on May 12, 2016 at 09:46

      What is wrong with KSS?

    • DividendVet on May 12, 2016 at 13:23

      It is, it costs $7.99 for me to buy and sell. I would much rather avoid the unnecessary fees by buying shares in a forever hold type of businesses.

      Sorry to hear about KSS, I never looked at the stock before.

      Cheers!

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