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1 Top Dow Dividend Stock to Buy for Passive Income in July
The Motley Foolยท2025-07-07 07:16

Group 1: Dividend Yield and Income Potential - The Dow Jones Industrial Average has a dividend yield of 1.8%, higher than the S&P 500's 1.3% and the Nasdaq-100's 0.8% [1] - Chevron stands out as a strong option for income seekers, with a current dividend yield over 4.5% [2][4] Group 2: Financial Resilience - Chevron's breakeven level is around $30 per barrel, the lowest in the industry, allowing it to generate substantial free cash flow with current crude oil prices in the mid-$60s [5] - The company produced $15 billion in free cash flow last year and has a quarterly dividend cost of $3 billion, indicating a strong financial cushion [5] - Chevron's leverage ratio was a low 14% at the end of the first quarter, well below its target range of 20%-25% [6] Group 3: Growth Initiatives - Chevron is investing heavily in high-return capital projects, including the Future Growth Project in Kazakhstan and the Ballymore project in the Gulf of Mexico [7] - The company estimates an additional $9 billion in annual free cash flow by next year, assuming a $60 oil price [8] Group 4: Acquisition and Future Outlook - Chevron is in the process of acquiring Hess for $60 billion, with a dispute over Hess' stake in a development offshore Guyana currently delaying the transaction [9] - The case is in arbitration, with a ruling expected soon, and Chevron has invested $2.2 billion to acquire nearly 5% of Hess' shares, indicating confidence in winning the case [10] - Even without the Hess acquisition, Chevron has a strong growth outlook and has increased its dividend for 38 consecutive years [11] Group 5: Conclusion on Investment Potential - Chevron's resilient portfolio and strong financial profile support its high-yielding dividend, making it an attractive investment for passive income [12]