There are two companies in the Dow Jones Industrial Average that focus primarily on gas and oil. These are Chevron and Exxon Mobil, and they have really struggled thanks to the seemingly constant drop in oil prices. Chevron, despite all of these problems going on with the price of crude oil right now, has taken steps to protect their investors by maintaining high dividend rates.
Obviously, this is a good thing for long term investors because it guarantees a return on the investment made, but it also raises some questions. For one, with all of the major oil companies throughout the world struggling to stay solvent right now, why is Chevron taking this risk? Everywhere, companies are cutting back on expenses, and paying a dividend is a huge expense. They are currently paying a dividend rate of $1.07 per share. There are a total of 1.88 billion shares of the company right now, which equals a total spending of over $2.01 billion paid out in dividends. (more…)