Chevron's Free Cash Flow Rises - An Expected Dividend Hike Could Push CVX 14% Higher

Core Insights - Chevron Corp (CVX) reported a 52% year-over-year increase in Q3 adjusted free cash flow (FCF), reaching $7 billion, which significantly exceeded its shareholder payments for dividends and buybacks [1][4][7] - The adjusted FCF margin for Q3 was 14%, an improvement from 9.1% a year ago, indicating enhanced operational efficiency [1][7] - The stock price of CVX is currently $155.72, with a potential upside to $177.49 if the company raises its dividend by 5%, representing a 14% gain [1] Financial Performance - Q3 adjusted FCF of $7 billion marked a 42.9% increase from $4.9 billion in Q2 and a 52% increase from $4.6 billion in the same quarter last year [4] - Year-to-date, Chevron's adjusted FCF totaled $16 billion, reflecting a 23% increase compared to the previous year [4] - The adjusted FCF margin for the first nine months was 11.3%, showing consistent growth in cash generation [7] Shareholder Returns - Chevron's Q3 adjusted FCF of $7 billion was greater than the $6 billion spent on dividends and buybacks, indicating strong cash generation capabilities [7] - Year-to-date, the total for dividends and buybacks was $18.5 billion, which is lower than the $16 billion in adjusted FCF, suggesting that the company can sustain its shareholder payments moving forward [7][8] Market Context - The stock is currently below its recent peak of $161.82 on September 2, but has recovered from a low of $148.90 on October 10 [1] - The article suggests that the current market reaction to Chevron's Q3 results presents a buying opportunity for value investors [3]