Exxon Mobil Corporation (XOM), Chevron Corporation (CVX): Why You Need a Dividend Like This One

Over the past five years, oil and gas giant Exxon Mobil Corporation (NYSE:XOM) has paid its shareholders $44 billion in dividends. Going back even further, Exxon Mobil Corporation (NYSE:XOM) has grown its payout to investors every single year since 1983. Rock solid dividends like that don’t come along very often, which is why investors need to hold on to a good thing.

Exxon Mobil Corporation (NYSE:XOM

Exxon Mobil Corporation (NYSE:XOM)’s current dividend rate of 2.9% might not turn too many heads. However, it’s the consistency with which it has been raised that has really added up over time. Take a look at the following slide:

Source: ExxonMobil Investor Presentation

Take a look at how the black line, which is CPI, slowly heads higher, but the red line, which represents Exxon’s dividend has significantly outpaced it over time. By consistently raising its payout Exxon Mobil Corporation (NYSE:XOM) was able to easily outpace inflation which would be critical if the income from Exxon’s dividend was being used to supplement retirement income.

There is a risk to investing in stocks, and that’s clearly seen in the blue line in the slide above, which shows the dip in dividends paid by the companies in the S&P 500 during the credit crisis. However, a bigger risk is inflation outpacing the fixed income from something like a bond or an annuity. While those both have a place in any retirement portfolio, the nightmare scenario for someone in retirement is inflation when living on a fixed income. A company that can consistently grow its dividend will ensure that inflation is doesn’t take an outsize bite out of the income critical for retirement.

Exxon Mobil Corporation (NYSE:XOM) of course is far from the only company that has constantly raised its investor payout. Fellow big oil peer Chevron Corporation (NYSE:CVX), for example, has grown its dividend by a compound annual rate of 11% since 2004. It even bested Exxon’s latest increase after boosting its payout by 11.1% in the second quarter, while Exxon Mobil Corporation (NYSE:XOM)’s increase was 10.5%. Meanwhile, pipeline operator Enterprise Products Partners L.P. (NYSE:EPD) has handed its investors an increased payout for 36 straight quarters.