Growth stocks can be unpredictable, which is why many conservative investors prefer dividend stocks for their consistent income. Dividends, typically distributed quarterly or monthly, offer a dependable income stream compared to more volatile asset classes. Dividend Aristocrats, in particular, represent mature, established companies that are generally less volatile than growth stocks. Here are two outstanding dividend stocks that income-oriented investors may find appealing.

Dividend Stock #1: Exxon Mobil

Established in 1870, Exxon Mobil (XOM) is among the world’s largest energy companies. It boasts a diverse and extensive asset portfolio that is divided into three primary segments:

• Upstream: Exploration and production of crude oil (CLH25) and natural gas (NGH25).
• Downstream: Refining and marketing of petroleum products, such as gasoline, diesel, and jet fuel.
• Chemical: Production of petrochemicals, plastics, resins, and other industrial products.

Valued at $489.3 billion, XOM stock gained 5.09% last year, while the S&P 500 Index ($SPX) surged 24%.

Exxon Mobil has consistently increased payouts, even in tough times. The company has raised its dividend for 42 consecutive years, earning it the title of Dividend Aristocrat, which are companies that have hiked their dividends for more than 25 years in a row. Currently, Exxon Mobil offers a forward dividend yield of 3.55%, slightly below the energy sector average of 4.24%. The company has room for future dividend growth with a low and sustainable forward payout ratio of 44%.

In the third quarter, Exxon reported earnings of $1.92 per share, down from $2.27 per share in the same quarter last year. According to management, this decline was driven by lower natural gas prices and industry refining margins. Exxon has reduced its debt by $4.7 billion as of Nov. 1, 2024, lowering its debt-to-equity ratio to 0.13x. By the end of Q3, the company held $27 billion in cash and generated adjusted free cash flow of $8.9 billion. This strong financial position enabled Exxon to return $9.8 billion to shareholders and raise its quarterly dividend by 4%.

Analysts anticipate an 18% drop in Exxon’s earnings in 2024, followed by a modest increase in 2025. Despite short-term challenges, Exxon is confident of its long-term growth targets. It plans to invest approximately $140 billion in major projects and the Permian Basin development program through 2030. The company projects $20 billion in earnings potential and $30 billion in cash flow potential to sustain shareholder returns. Additionally, Exxon aims to repurchase shares at an annual rate of $20 billion by 2025. It also expects to achieve compounded annual growth rates of 10% for earnings and 8% for cash flow by 2030.

Overall, analysts rate XOM stock a “Moderate Buy." Among the 24 analysts covering the stock, 15 give it a “Strong Buy” rating, eight recommend “Hold,” and one rates it as a “Strong Sell.” With an average target price of $129.91, the stock has upside potential of 16.7% from its current level. Additionally, the highest target price of $147 suggests potential 32% upside over the next 12 months.

Dividend Stock #2: Chevron

Founded in 1879, Chevron (CVX) has grown into a vertically integrated oil and gas company operating in more than 180 countries. Chevron’s business covers the entire energy value chain, with upstream and downstream segments like Exxon, along with investments in renewable fuels, carbon capture, and hydrogen technologies. With a market cap of $284.1 billion, Chevron’s stock declined by 3% last year, compared to the broader market’s gains.

In the third quarter, Chevron’s adjusted earnings fell by 17.7% to $2.51 per share, impacted by lower margins on refined product sales and tax-related challenges. On the positive side, increased production in the Permian Basin and contributions from the 2023 acquisition of PDC Energy drove a 7% year-over-year increase in global net oil-equivalent production. Chevron’s long history showcases its resilience and adaptability. The company has consistently raised its annual dividend for 37 consecutive years, also earning the status of a Dividend Aristocrat.

Chevron maintains a sustainable payout ratio of 50.9%, ensuring the stability of its dividends even in challenging times. The company offers an appealing dividend yield of 4.09%, slightly lower than the energy sector average. With free cash flow of $5.6 billion in Q3, Chevron was able to support dividend payments and share buybacks totaling $7.7 billion in the third quarter, while also investing in growth initiatives.

Furthermore, its financial health is supported by a balance sheet with $4.7 billion in cash and cash equivalents at the end of the quarter and a low debt-to-equity ratio of 0.16x. The company is focused on cost optimization to improve operational efficiency and sustain shareholder returns. To achieve this, Chevron plans to divest $10 billion to $15 billion in assets by 2028 and implement structural cost reductions of $2 billion to $3 billion from 2024 through the end of 2026.

Analysts predict Chevron’s earnings will rise to $2.14 per share in the fourth quarter, up from $1.22 in the same period last year. For 2024, earnings are expected to decline by 21.7%, but a rebound of 7.17% is anticipated in 2025. On Wall Street, Chevron is rated a “Strong Buy,” with 15 out of 22 analysts recommending it as a “Strong Buy,” two as a “Moderate Buy,” and five suggesting a “Hold.” The stock’s average price target of $176 suggests potential upside of 10.4%, while the highest target of $197 points to a possible gain of 23.6%. Despite current challenges, Chevron’s strong financial performance, disciplined capital management, and focus on shareholder returns make it a top choice for dividend investors.