Chevron vs BP Which Should You Buy?

Chevron and BP are two major players in the oil and gas industry, both with a global presence and significant influence on the market. While both companies have faced challenges in recent years, including fluctuating oil prices and environmental concerns, they remain key players in the energy sector. Investors may consider several factors when comparing the two stocks, such as financial performance, sustainability initiatives, and future growth potential. Understanding the differences and similarities between Chevron and BP can help inform investment decisions in the energy sector.

Chevron or BP?

When comparing Chevron and BP, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Chevron and BP.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Chevron has a dividend yield of 3.03%, while BP has a dividend yield of 7.93%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Chevron reports a 5-year dividend growth of 6.16% year and a payout ratio of 70.19%. On the other hand, BP reports a 5-year dividend growth of -7.33% year and a payout ratio of 182.37%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Chevron P/E ratio at 17.42 and BP's P/E ratio at 29.08. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Chevron P/B ratio is 1.86 while BP's P/B ratio is 1.22.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Chevron has seen a 5-year revenue growth of 0.24%, while BP's is -0.19%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Chevron's ROE at 10.47% and BP's ROE at 3.99%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $160.76 for Chevron and $28.83 for BP. Over the past year, Chevron's prices ranged from $135.37 to $167.11, with a yearly change of 23.45%. BP's prices fluctuated between $27.82 and $40.40, with a yearly change of 45.22%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.