CVX vs. EPD: Which Energy Giant Offers Better Dividend Value?

Chevron Corporation (CVX) and Enterprise Products Partners L.P. (EPD) stand out as two oil/energy giants with strong ties to the Permian Basin and a reputation for steady capital returns. Both names also appeal to income-focused investors: Chevron through decades of dividend growth, and EPD through a stellar record of distribution hikes. With energy markets balancing between growth opportunities and cyclical pressures, these two stocks offer investors distinct ways to play the oil and gas sector while ensuring consistent shareholder rewards.

Let’s dive deep and closely compare the fundamentals of the two stocks to figure out which one offers better prospects.

The Case for CVX Stock

Chevron is coming off a transformative $53 billion acquisition of Hess, which reshapes its portfolio by adding premium Guyana assets and strengthening U.S. shale exposure. Management expects $1 billion in annual synergies by 2025 and an additional $12.5 billion in free cash flow by 2026. This diversification away from the Permian gives Chevron a buffer against plateauing shale growth and secures a foothold in one of the world’s most lucrative offshore projects.

Alongside these growth moves, Chevron continues to focus on shareholder returns. It has guided a $10-20 billion annual buyback program, backed by one of the sector’s strongest balance sheets and a disciplined $15 billion capex program. With 37 straight years of dividend increases and a yield above 4%, CVX remains a core income play.

Strategically, Chevron is branching out beyond traditional oil and gas. Its joint venture to provide up to 4 GW of natural gas power for AI-driven data centers shows the company’s willingness to adapt to new demand trends. Meanwhile, its Permian assets — where output topped 1 million barrels of oil equivalent per day — remain a crown jewel, even as production levels show signs of flattening. The combination of scale, diversification and efficiency positions Chevron to generate robust cash flow, even through commodity cycles.

That said, risks loom. Valuation is stretched relative to peers, with shares trading at a forward multiple above historical averages. Earnings have also come under pressure, reflecting sensitivity to oil prices and higher costs. The integration of Hess and execution of newer ventures, such as lithium extraction and data-center power supply will require flawless delivery to maintain investor confidence.

The Case for EPD Stock

Enterprise Products Partners offers a very different value proposition. Unlike Chevron’s upstream-heavy profile, EPD runs a diversified midstream model with 50,000 miles of pipelines, large-scale storage, and export terminals. Recent acquisitions in the Permian — including $580 million of Occidental assets and a $950 million purchase of Piñon Midstream — expand its gas position in America’s most prolific shale basin. These assets, combined with $4-$4.5 billion in planned growth spending for 2025, should provide steady cash flow expansion well into the next decade.

What sets Enterprise Products Partners apart is the consistency of its distributions. The firm has increased payouts for 27 consecutive years and maintains a yield just shy of 7%, backed by a coverage ratio of 1.6X. Unlike Chevron, whose returns are more sensitive to oil prices, EPD operates under a fee-based structure, with about 90% of its long-term contracts including escalation clauses. These provisions help offset inflationary pressures, protecting both cash flows and distributions. This stability gives income investors confidence that distributions can grow even if commodity prices soften.

EPD’s financial discipline further strengthens its profile. Debt-to-EBITDA sits around 3.0X, well below the sector average, while $5 billion in liquidity provides ample flexibility. Importantly, management plans to reduce growth capex to $2-$2.5 billion by 2026, freeing up additional cash for buybacks or faster distribution growth. Combined with an extensive growth pipeline — including NGL fractionation, petrochemical infrastructure, and LNG-related projects — Enterprise Products Partners looks well-positioned to capitalize on rising export demand.

Still, the midstream story has limitations. Distribution growth at EPD has been steady in recent years, though more moderate compared to some peers. Heavy capex spending carries execution risk, and weakness in the LPG segment has already pressured margins. Moreover, while fee-based, EPD is not completely immune to shifts in commodity demand, leaving room for volatility if global energy markets weaken.

Price Performance

So far in 2025, Chevron shares are up nearly 9% year to date, handily outperforming EPD, which has gained just 0.3%. The divergence reflects Chevron’s Hess-driven growth narrative and record Permian output.

Valuation Comparison

Valuation metrics for both remain close. CVX trades at 1.35X forward price-to-sales (P/S), slightly above Enterprise Products Partners’ 1.29X, reflecting its growth potential. However, this premium could limit near-term upside. EPD, on the other hand, typically trades at a discount given its midstream focus, but it delivers more stable cash flows.

EPS Outlook

Analyst revisions provide another contrast. Over the past 60 days, the Zacks Consensus Estimate for Chevron’s 2025 earnings has moved up 8% and for 2026 is also higher by 5%.

In contrast, estimates for EPD’s 2025 and 2026 earnings have moved down, reflecting margin pressure and slower growth expectations. That divergence underscores near-term momentum favoring Chevron over Enterprise Products Partners.

Conclusion

Both Chevron and Enterprise Products Partners offer compelling reasons for consideration. Chevron provides scale, growth, and diversification, but comes with valuation and integration risks. EPD delivers unmatched distribution stability and financial discipline, though growth may lag more aggressive peers. Each of the stocks carries a Zacks Rank #3 (Hold), making it difficult to crown a clear winner. However, with upward earnings revisions, stronger price performance, and growth catalysts from Hess and Guyana, Chevron looks slightly better placed for now.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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