How To Collect $1,000 Per Month From Warren Buffett's Favorite Energy Stock

Legendary investor Warren Buffett has achieved astounding returns throughout his career. From 1964 to 2022, his company Berkshire Hathaway Inc. BRK delivered an overall gain of 3,787,464%, dwarfing the S&P 500's 24,708% return during the same period. 

Other than picking stocks that skyrocketed in value, Buffett also collects dividends — a lot of dividends.

Buffett famously said, "If you don't find a way to make money while you sleep, you will work until you die."

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Plenty of companies in Buffett's portfolio pay dividends to shareholders. Today's focus is on Chevron Corp. CVX, the largest energy stock in Berkshire's portfolio.

As of September 30, Berkshire held 110,248,289 shares of Chevron. With the position valued at $18.59 billion at the time, Chevron was Berkshire's fifth-largest publicly traded holding.

With oil prices being volatile, energy stocks also tend to experience wild swings. Chevron shares enjoyed massive rallies in 2021 and 2022, but are down about 16.3% in 2023.

Besides trading the stock, investors can also collect dividends from the energy giant. Chevron has a quarterly dividend rate of $1.51 per share, translating to an annual yield of 4.2%. Considering that Berkshire held 110,248,289 shares of Chevron, it stands to collect $166.47 million in quarterly dividends from the company.

But you don't need to be the Oracle of Omaha to earn dividends from the energy giant.

Growing Dividends From Chevron

In January, Chevron's board approved a 6% increase to the company's quarterly dividend to $1.51 per share. With this increase, Chevron is on track to mark 2023 as the 36th consecutive year of increased annual dividend payout per share.

Chevron follows a quarterly distribution schedule. If you want to collect $1,000 per month from the company, you are looking at $3,000 per quarter. And that means you would need to own 1,986.75 shares of the company. This is calculated by dividing the $3,000 by the per-share quarterly payout of $1.51.

And because Chevron currently trades at $145.66 per share, 1,986.75 shares would mean about $289,390 worth of the stock.

If you aim for a smaller target of earning $200 per month — or $600 per quarter — you would need 397.35 shares ($600/$1.51) or $57,878 worth of Chevron stock (397.35 x $160.63).

While Chevron shares have pulled back recently, Mizuho analyst Nitin Kumar sees better days ahead for the oil supermajor. The analyst has a Buy rating on the company and a price target of $195 — around 33% above where the stock currently sits.

Stocks can fluctuate wildly, and even top analysts aren't right 100% of the time. Always conduct comprehensive research and due diligence before diving in. 

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