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8 Cheapest Dow Dividend Stocks for 2011

3. Chevron (CVX - Get Report) is the world's second-largest energy company. Its rival is Exxon (XOM).

Quarter: Third-quarter net income declined 1.7% to $3.8 billion. Earnings per share fell 2.6% to $1.87. Revenue increased 7.6% to $46 billion. The gross margin extended from 21% to 23% and the operating margin expanded from 11% to 12%. Chevron held nearly $15 billion of cash and equivalents and $11 billion of debt at the end of the quarter, equaling a quick ratio of 1.2 and a debt-to-equity ratio of 0.1. Crude oil currently costs nearly $89 a barrel.

Valuation: Chevron's stock trades at a forward earnings multiple of 8.5, a book value multiple of 1.6, a sales multiple of 0.9 and a cash flow multiple of 5.5, 58%, 59%, 71% and 34% discounts to oil and gas peer averages. Its PEG ratio of 0.1 reflects a 90% discount to estimated long-term fair value. Chevron's trailing earnings multiple of 9.9 represents a 46% discount to the peer average, but a modest premium to the company's five-year average multiple.

Dividend: Chevron pays a quarterly dividend of 72 cents, translating to a yield of 3.4%, higher than the 10-year Treasury yield, and a payout ratio of 34%. Chevron has a record of distribution increases.

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BAC $16.35 -0.55%
CVX $108.00 -0.30%
JPM $64.40 -0.49%
HPQ $33.16 -1.46%
MSFT $47.60 -1.33%


DOW 17,928.20 -142.20 -0.79%
S&P 500 2,089.46 -25.03 -1.18%
NASDAQ 4,939.3270 -77.6020 -1.55%

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