The whole premise of a dividend is to return earnings to the shareholders. Does it make any sense to borrow money or sell assets to be paying the dividend? Who in the hell does that?? Chevron Executives do it!!! Earnings were a paltry $550 million for Q2. That was when oil was around $50-60 for the quarter. Q3 earnings might possibly be negative. They need $2 billion per quarter just to cover the dividend. Cutting the dividend is a strong, unequivocal signal to the market that a company is in financial distress. Hold onto your hat (or ass with both hands) if you are investing in Chevron.
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I joined this company 5 years ago because of the strong balance sheet. Watson even said we were cash-rich in a townhall (remember the rumors about buying Chesapeake?). Sigh, where did it all go? MCPs...
This is the OP again. Just want to thank and acknowledge the insights on cash (anon 136142 and 136344). I have been watching that too. I am astounded at the pace at which CVX is burning through cash. It is scary. The public reading these posts, if they don't know already, can go to Yahoo Finance and enter "CVX", then on the left click on Balance Sheet, Income Statement, Cash Flow, and Key Statistics. And for fun, compare the levered net cash flow to the peer group of XOM, RDS, and BP.
Oh and I should say that we are not going to be able to pay the electric bill let alone a dividend.
Anonomous136142 is putting out the most important thing most don't understand. Cash Flow Statements (CFC) were required as part of financial reporting. It now has to be reported along with the Income Statement and Balance Sheet. The tricks are called our accounting system. Accrued Accounting :-). CASH IS KING. The cash flow statement is distinct from the income statement and balance sheet because it does not include the amount of future incoming and outgoing cash that has been recorded on credit. Therefore, cash is not the same as net income, which, on the income statement and balance sheet, includes cash sales and sales made on credit.
FUPM
This is the original poster again. Laughing out loud at Anon 136144...you are absolutely right. I never should have said that, "Watson and Yarrington must be losing sleep." They are too rich, disconnected, and self-absorbed for that.
Highly unlikely they are losing sleep, that is like saying people in the burbs lose sleep over the bum downtown. They have theirs and although they seem interested I guarantee they are sleeping well in Blackhawk.
I'm awash with cash. Been hesitant to invest in the stock market too much. So, I'm keeping close tabs on CVX and will mop up once the stock price goes down to $74-$76. It will head lower because oil prices won't lift past $55 this year, but the main reason for the stock tanking with be the impending dividend cut. Look for this news to come out during the 3Q-2015 earnings conference call or right before year end.
Don't pay attention to earnings. Accounting tricks can manipulate that. Look at cash flow less new debt. It's scary.