Could $1K in Chevron Stock Have Doubled in 10 Years? Explore Its Track Record
Investors who look to put their money in well-known names with track records of success have likely looked at Chevron and other related companies. After all, Chevron has increased and maintained its dividend even through some tough times in the oil industry.
According to Jacob Bayer, certified financial planner (CFP) and founder of Jacob Bayer Wealth Management, “What $1,000 would be worth now is an entertaining thought and a poor method of making decisions. It demonstrates a stock that we already see was successful.”
Read on to explore what a $1,000 investment in Chevron a decade ago would be worth now, and some considerations going forward.
The Current Worth of a $1K Investment from 10 Years Ago
“If you had invested $1,000 in Chevron stock 10 years ago and reinvested the dividends, you would have nearly doubled that amount now,” according to Melanie Musson, a finance expert with Quote.com. “The average annual rate of return over the past 10 years is about 6.3%.”
Chevron is known for a solid track record of dividend payments, according to Brandon Gregg, CFP, advisor with BBK Wealth Management, and many people utilize these dividends as income.
“With that said, you can see the difference in the final balance when dividends aren't spent but are reinvested,” he added. “If you had invested $1,000 in Chevron 10 years ago and left it untouched, your balance would have grown by 1.5 times.”
Per Musson, if you look at Chevron’s performance, you’ll see that some years are excellent and others are not.
“Doubling over 10 years is better than having money sit in the bank earning no interest, but the stock market has delivered higher returns over the past 10 years,” Musson noted.
The Risks for the Oil Industry Sector
There's also environmental and energy transfer risk, Gregg noted. “There has been a huge debate recently about whether to use less oil and more electric or environmentally friendly alternatives. This debate will continue and could pose potential risks to the oil industry sector.”
In any case, Gregg said, Chevron has proven to be a solid dividend paying investment and has shown steady growth over time. “With proper diversification, it could prove to be a useful asset in a portfolio,” he added.
Consider Diversification for Your Investments
The financial pros agreed that as with any investment, diversification is important.
“Single stocks are risky,” Musson explained. “It’s fine to have some as part of a diversified portfolio, but single stocks shouldn’t make up the bulk of your investments. They should be just a small part of your portfolio.”
Gregg agreed that Chevron should only be a small percentage of your overall portfolio.
“Since it deals directly in oil, commodity risk exists,” Gregg added. “As we've seen in recent news, oil is greatly impacted by global events, which in turn greatly affects Chevron. This also ties into political risks, as much of what is happening now is a direct result of political actions.”
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.