Matt DiLallo, The Motley Fool

Mon, Jun 16, 2025, 2:13 AM5 min read

• ExxonMobil has built one of the strongest businesses in the oil patch.

• The company expects to deliver meaningful earnings and cash flow growth through 2030.

• It should have plenty of fuel to continue increasing its high-yielding dividend over the next five years.

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Companies that pay a stable dividend can make solid investments. Historically, they've produced higher total returns with less volatility than companies that don't pay dividends. However, the highest total returns have come from companies that regularly increase their dividends.

Few companies can match ExxonMobil's (NYSE: XOM) dividend growth track record. The oil giant has increased its payout for 42 straight years, a claim only 4% of S&P 500 members can make.

I fully expect the oil giant to continue increasing its dividend every year through at least 2030 despite oil market volatility and a steady shift toward cleaner fuel sources. Here's what fuels that prediction.

ExxonMobil has built one of the most profitable companies in the oil patch. Last year, the oil giant generated $34 billion in earnings and $55 billion in cash flow from operations. That was its third best year in a decade, even though oil prices were around their 10-year average.

The company's strategy has been to invest heavily in its advantaged assets -- those with the lowest cost and highest margin -- while also working to strip out structural costs. Exxon is growing its production from places such as the Permian Basin and offshore Guyana, which is steadily lowering its cost of supply and boosting its margins. It has also achieved a cumulative $12.7 billion of structural cost savings since 2019. That's more than the reported cost savings of all other international oil companies combined. This combination of growing its most profitable operations and reducing costs has helped expand the company's earnings capacity.

Exxon also has the strongest balance sheet in the oil patch. It ended the first quarter with an industry-leading leverage ratio of only 7% net debt to capital. The company has the highest credit rating in the industry and an $18.7 billion cash cushion.

Exxon's low costs and fortress balance sheet put its dividend on a rock-solid foundation.

The oil giant updated its long-term corporate plan last year, extending it through 2030. Its 2030 plan would see the oil giant deliver a growth potential of $20 billion in earnings and $30 billion in cash flow over the next five years compared with last year's baseline.