Another high-yielding oil major bit the dust this week as investors waved goodbye to ConocoPhillips (NYSE: COP)’s 8.3% dividend yield when the company announced a 66% dividend cut. The move underscores the importance of assessing the health of a dividend prior to investing in a stock, especially in an industry under as much pressure as the oil industry is currently under.

Now that COP has pulled the trigger on a cut, Chevron Corporation (NYSE:CVX)’s 5.0% yield will likely start drawing some intense scrutiny from dividend investors as well. Today, I’ll take a look at closer look at CVX’s generous dividend to determine whether or not shareholders should be concerned that CVS will soon follow in COP’s footsteps.

How did we get here?
One look at a graph of CVX’s share price versus its dividend yield in recent years exposes what’s really behind the surge in CVX’s yield: falling share price.

Unfortunately, this is not the ideal route to a high yield for dividend investors, who would prefer to see payout hikes behind a high yield rather than stock weakness. It’s also unsettling that CVX has never before ventured above a 5.0% yield in history, an indicator that management would likely prefer a lower payout.

Value
Unfortunately, there’s no sure-fire way of determining when a company will pull the trigger on a dividend cut, but there are…

Click here to continue reading

Want to learn more about how to profit off the stock market? Or maybe you just want to be able to look sophisticated in front of your coworkers when they ask you what you are reading on your Kindle, and you’d prefer to tell them “Oh, I’m just reading a book about stock market analysis,” rather than the usual “Oh, I’m just looking at pics of my ex-girlfriend on Facebook.” For these reasons and more, check out my book, Beating Wall Street with Common Sense. I don’t have a degree in finance; I have a degree in neuroscience. You don’t have to predict what stocks will do if you can predict what traders will do and be one step ahead of them. I made a 400% return in the stock market over five years using only basic principles of psychology and common sense. Beating Wall Street with Common Sense is now available on Amazon, and tradingcommonsense.com is always available on your local internet!