Better Energy Stock: TotalEnergies vs. Chevron

Chevron and TotalEnergies, both integrated energy giants with high dividend yields, present distinct investment profiles; Chevron boasts a 4.8% yield and a 38-year history of consecutive dividend increases alongside a stronger balance sheet, while TotalEnergies offers a higher 6.5% yield and a commitment to renewable energy expansion, though U.S. investors face French taxes on its dividends. TotalEnergies maintained its dividend during the 2020 cuts by peers and is actively transitioning to clean energy, contrasting with Chevron's focus on traditional oil and gas, but Chevron faces company-specific issues including acquisition challenges and geopolitical risks.

Analysis

Chevron (CVX) and TotalEnergies (TTE), both integrated energy giants, offer distinct investment propositions despite operational similarities across upstream, midstream, and downstream segments. Chevron currently yields 4.8% and boasts an impressive 38-year history of consecutive annual dividend increases, supported by a strong balance sheet with a debt-to-equity ratio of approximately 0.2. However, CVX is currently navigating company-specific issues, including an acquisition not progressing as anticipated and geopolitical challenges related to its Venezuelan operations, which contributes to its relatively higher yield compared to U.S. peer ExxonMobil (3.8% yield) and a slightly negative per-ticker sentiment of -0.2. In contrast, TotalEnergies offers a higher dividend yield of 6.5% and is actively pursuing a strategy to expand into the electricity sector, with a focus on renewable power, which accounted for around 10% of its adjusted net operating income in 2024. TTE maintained its dividend in 2020 when European peers BP and Shell made cuts, underscoring management's commitment to shareholder returns, and exhibits a more positive per-ticker sentiment of 0.5. While TTE's debt-to-equity ratio is higher at 0.5, it holds a significantly larger cash position ($29 billion versus CVX's $4.6 billion). U.S. investors in TTE should be aware that dividends are subject to French taxes, although some may be reclaimable. TotalEnergies' explicit commitment to clean energy distinguishes it from Chevron, which remains more focused on its traditional oil and natural gas operations.

Key Decisions for Investors

• Investors prioritizing a long-standing track record of dividend growth and a more conservative balance sheet, coupled with a traditional energy sector focus, may find Chevron a suitable option, but should monitor the resolution of its current acquisition and geopolitical challenges.
• Investors seeking a higher current dividend yield and direct exposure to the energy transition towards renewables might consider TotalEnergies, factoring in the implications of foreign dividend taxation and the company's ongoing execution in its clean energy expansion.
• Evaluate both companies based on individual risk tolerance for factors such as strategic pivots to renewables versus traditional energy exposure, dividend consistency versus current yield, and company-specific operational risks versus broader energy market dynamics.