Chevron locks in 2022 gains with new buyback, dividend hikes

Yahoo Finance’s Ines Ferre joins the Live show to discuss the White House’s take on Chevron’s buyback program.

Video transcript

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BRAD SMITH: Let's turn now, to shares of Chevron, as it seeks to lock in gains from soaring oil prices in 2022. That company announcing a share buyback program and dividend hike. Here with more, we've got Yahoo Finance's Ines Ferre.

INES FERRE: And Brad, Chevron announced that it plans to buy back $75 billion of shares. That's triple the size of its previous authorized program, and the plan represents a little more than about 20% of the company's current market cap. Chevron also says that it will increase dividend payouts by 6.3% from the previous quarter, to $1.51 per share. Now, Chevron has had record profits. By comparison, though, you may think this is really big. Well, Apple bought back almost $90 billion of shares in fiscal 22 '22.

But critics are saying, look, you're making record profits, you need to be drilling more, you need to be producing more oil in order to bring down the price of oil of gasoline for Americans, and that's precisely what the White House said in a statement through a spokesperson. Saying that, "For a company that claimed not too long ago that it was "working hard" to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it."

Now, oil has pulled back from the prices that we saw last year, but look, oil companies have really kept their spending in check and have wanted to give back money to shareholders. As far as some commentary that we saw from Wall Street, regarding this, JPMorgan analysts say that Chevron's buyback program could signal higher top-end guidance to come. Also, expect the pacing of this buyback to be a key topic in the company's earnings fourth quarter earnings call, which, by the way, Chevron will be reporting its results tomorrow. So the Street is really going to be paying attention to this.

Right now, shares are up more than 2.5% Last year, this stock did very well-- up 50% last year. And look, guys, I've spoken to quite a few analysts saying, could the oil companies repeat their performance from last year? And certainly, the consensus that I have heard is perhaps, not as big as last year, but certainly, energy is expected to do well-- energy companies are expected to do well this year. Guys.

JULIE HYMAN: Yeah, Ines, I think that's echoing some of what we've heard from investors sentiment-wise, as well. Now, after Chevron, we're going to get Exxon next week, some of the other oil majors, as well. Are we also expecting maybe some new cash returns from some of the others?

INES FERRE: Perhaps, we could. I mean, again, this is their-- their motto has been to return cash to shareholders, and that's what they've been focusing on-- to really keep their spending in check, to keep their CapEx in check, and to be able to return to shareholders. I want to point out that, by the way, Chevron has 14 buys, 12 holds, and three sells. These companies, I'm going to pull up the chart one more time so you can see the year-to-date chart for the energy companies and one year chart for the energy companies. They've really done well over the last year so shareholders are expecting to be paid back. We will see if others also announce something similar.