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Chevron (NYSE:CVX) has been a core value holding within my income portfolio for some time. It provides a nice yield, growing payouts, and solid valuations. I have been a bit apprehensive going into this earnings season given the tepid results from Exxon Mobil (NYSE:XOM) and falling oil prices during the back half of the first quarter. However, Chevron delivered a solid earnings report this morning that alleviated those concerns and showed once again why the oil giant deserves to continue to play an important part of the value/income part of my portfolio.

Here are several key highlights from the earnings report from CVX:

  • Earnings were down slightly from last year but came in at $3.18 a share, 10 cents above consensus estimates.
  • Revenue came in $300 million better than the consensus expectations for this quarter, even as sales were down year-over-year.
  • The company also used its prodigious cash flow to buy back $1.25 billion in share repurchases.
  • Maintenance and upgrades at two key refineries increased operating expenses in the quarter, but these are mostly complete and should not show up in subsequent quarters. Refinery revenues/earnings should also improve in the coming quarter as refineries will show less downtime.
  • The company announced earlier in the week that it will increase its dividend 11% to $1.00 a share quarterly.

Here are four additional reasons why CVX is a solid value pick at $118 a share:

  1. With the just announced dividend hike, the shares will yield just under 3.4%. The company has now increased its payout by 150% since 2005. The company has an AA-rated balance sheet and continues to reward shareholders with share repurchases in addition to dividend payouts.
  2. This is the third time in the last four quarters the company has beat earnings estimates. Consensus earnings estimates for both FY 2013 and FY 2014 have also risen nicely over the last few months before the current results.
  3. Some are concerned that Chevron is showing flat production currently. However, the company has announced some significant discoveries in offshore Australia recently that will position the company to supply some of Asia's longer-term LNG needs, which will be a core part of future revenue growth.
  4. Given its dividend yield and balance sheet, CVX is fairly cheap at under nine times current earnings and around six times operating cash flow. Standard & Poor's has given its highest rating, "Strong Buy," to the stock and has a $142 a share price target.

Disclosure: I am long CVX. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Chevron Delivers