Jim Cramer says Chevron looks attractive thanks to its dividend, but oil could fall further

  • CNBC's Jim Cramer said Chevron looks attractive right now for investors who want to buy an oil stock.
  • However, the "Mad Money" host cautioned that more weakness for crude could be in store.
  • Oil prices hit their lowest levels since May on Thursday due, in part, to demand concerns.

In this article

  • @CL.1
  • CVX

Investors who want to buy an energy stock as the price of oil slides should look to Chevron, CNBC's Jim Cramer said Thursday.

"Here's a stock that everyone seemed to just be gaga about a few weeks ago, and now it can't get any love," the "Mad Money" host said of Chevron. "The stock's fallen from $113 to $94, but at these levels it sports a 5.7% yield. I like Chevron very much."

An attractive dividend is the primary reason to consider owning an oil stock right now, Cramer suggested.

Outside of Chevron, Cramer said two other oil plays that carry slightly more risk are Devon and Pioneer Natural Resources. While both companies have solid variable dividends, he stressed that "their payouts could shrink as oil comes down."

The price of crude slid in recent weeks and on Thursday closed in the red for the sixth-straight session, touching its lowest level since May.

The U.S. oil benchmark, West Texas Intermediate crude futures, dropped 2.7% to settle at $63.69 per barrel. Brent crude, which is the international benchmark, declined about 2% to just under $67 per barrel.

After a red-hot start to the year, oil has faced weakness due, in part, to concerns about slowing demand as the coronavirus pandemic persists around the world. Comments this week about a potential change to the Federal Reserve's highly accommodative monetary policy also caused the U.S. dollar to strengthen. That can end up hurting oil because it makes crude more costly for overseas buyers.

In July, as WTI traded above $72 per barrel, Cramer said he believed oil had put in its near-term top. He said Thursday more weakness could be ahead, as an increase in supply clashes with a slump in demand. Investors who are looking to buy an oil stock need to be mindful of that, Cramer said.

"Be careful, because oil … may not be done rolling over yet," he said. "I don't know if oil can even hold above $60 these days. Most American producers are still plenty profitable above $60, but below that level, it does start to get more dicey."

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter – Jim Cramer Twitter – Facebook – Instagram

Questions, comments, suggestions for the "Mad Money" website? [email protected]

Source: Read Full Article