(NYSE: CVX) is an icon in the energy sector, competing with some of the biggest and best-known energy companies in the world. If you were looking to get some exposure to the sector via an individual stock, it would likely be on your short list. But how would an investment in Chevron have worked out over time relative to a more diversified option like the Vanguard Energy Index ETF (NYSEMKT: VDE)?

Diversification is important for investors, and one way to achieve it is to hold shares of companies from a variety of sectors. Chevron would be a good choice for a holding in the energy space. It has an over-30-year streak of annual dividend increases, a rock-solid balance sheet, and it provides exposure to all three major segments of the oil and natural gas industry: upstream (drilling), midstream (pipeline), and downstream (refining and chemicals). Add in a dividend that yields nearly 3.9% at the current share price, and it's clear why investors looking for an energy stock would be well advised to do a deep dive into this one.

At the other end of the spectrum is an exchange-traded fund (ETF) like Vanguard Energy Index ETF, which offers intra-sector diversification. The fund owns a basket of energy stocks, including Chevron, so you don't have to try to pick the sector's winners. It has a dividend yield of roughly 4.4% and around $8.5 billion in assets, so it is unlikely to be closed down anytime soon. 

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Source Fool.com