Key Takeaways
- Chevron yields 3.2% and Shell yields 3.1%, and both reported third-quarter free cash flow far above what their dividends cost.
- Shell’s dividends took 27% of its free cash flow over the twelve months to June 30, 2026, against 41% for Chevron over the twelve months to Sept. 30, 2026.
- Chevron has raised its dividend for 39 consecutive years, while Shell cut its payout in 2020 and has been rebuilding it since.
- Shell trades at 8.7x forward earnings, well below Chevron’s 12x.
Chevron (CVX) and Shell (SHEL) just turned in big third quarters. Chevron’s free cash flow came to $12.0 billion, up from $4.9 billion a year earlier, and Shell’s was $16.3 billion.
Both held their dividends: Chevron declared its $1.78 quarterly payout again in October, and Shell kept its dividend at $0.3906 a share on Oct. 29 while lifting its buyback to $5 billion, from $3 billion.
So for an investor who owns an oil major for the income, which dividend is the better one to hold?
| Metric | Chevron (CVX) | Shell (SHEL) |
|---|---|---|
| Dividend yield | 3.2% | 3.1% |
| Dividend growth, fiscal 2020-2025 | 5.8% a year | 17.4% a year |
| Dividend growth, fiscal 2015-2025 | 4.8% a year | -2.6% a year |
| Cash dividend payout ratio (TTM) | 41% (to Sept. 30, 2026) | 27% (to June 30, 2026) |
| Net debt/EBITDA (LTM) | 0.5x | 0.5x |
| Interest coverage (EBIT/interest, LTM) | 25.2x | 7.8x |
| Forward P/E (NTM) | 12x | 8.7x |
Source: TIKR, Nov. 5, 2026.
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Chevron: 39 years and counting
Chevron says it has raised its dividend for 39 consecutive years. CFO Eimear Bonner restated where the dividend ranks on the Oct. 30 call: “the first priority within that is to grow the dividend consistently.”
Chevron kept that priority through lean years. In fiscal 2020, its free cash flow fell to $1.66 billion, from $13.2 billion in fiscal 2019, while it paid $9.65 billion in dividends.
The cushion was thin coming into 2026. Dividends took a tight 78.4% of free cash flow in fiscal 2024 and 76.9% in fiscal 2025.
Then the cash poured in. The third quarter took the cash dividend payout ratio for the twelve months to Sept. 30 down to a comfortable 41%, and net debt fell $7.8 billion from the second quarter.
The risk is the one fiscal 2024 and 2025 showed: if free cash flow drops back toward fiscal 2025’s $16.6 billion, the dividend eats most of it again.
Shell has more room to spare
Shell has a shorter record than Chevron and a lot more room in its payout. Its yearly cash dividend payout ratio ran from 16.2% to 35.4% from fiscal 2021 to fiscal 2025:
The chart shows Shell’s 2020 cut, too. Its free cash flow of $17.5 billion in fiscal 2020 would have covered the $15.2 billion it paid in fiscal 2019, and it halved its dividend anyway, to $7.42 billion. Its dividend per ordinary share has grown 17.4% a year since, from $0.65 in fiscal 2020 to $1.45 in fiscal 2025. (Shell declares its dividend in US dollars, and each US-listed ADS is two ordinary shares, so ADS holders get $0.7812 a quarter.)
Shell aims to hand 40% to 50% of its cash flow from operations to shareholders through the cycle, and it uses the buyback to keep pace. CFO Sinead Gorman said on the Oct. 29 call that Shell wants to pay out that range “with some consistency, and we’ve been building that track record.”
Net debt fell to $39.7 billion at Sept. 30, from $41.8 billion at June 30.
The main risk is the Strait of Hormuz, where disruption has cost Shell volumes from its Qatari assets.
So which dividend wins?
Chevron is the better dividend stock. What decides it for me is fiscal 2020: Chevron kept raising its payout when cash got tight, and Shell halved its dividends.
Chevron also pays more today. $10,000 in Chevron at its 3.2% yield pays $320 a year, against $310 from Shell. At its 17.4% five-year rate, Shell’s income would pass Chevron’s in 2027, but that rate starts from the 2020 cut. At the pace each raised in fiscal 2025, 4.9% at Chevron and 4.3% at Shell, the $10,000 in Chevron pays about $493 in year 10, against about $453 from Shell.
And you aren’t paying up for Chevron’s record. It trades at 12x forward earnings, below its five-year average of 14x:
Shell has a strong case of its own. Its dividend takes a far smaller share of its free cash flow, and it trades at just 8.7x forward earnings. With the buyback taking the swings in its cash, I’d be surprised to see Shell cut again any time soon. But for income, Chevron’s 39 years of raises, its 25.2x interest coverage and its bigger check are what I’d rather count on.
Of course, Chevron expects to raise its exploration spending 50% from its 2025 baseline, and it’ll lay out its 2027 capital program in December. A much bigger capex bill would take back some of the cushion Chevron rebuilt this quarter.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
