This Dividend Juggernaut Just Hiked Its Payout for the 39th Consecutive Year (And It Has Plenty of Fuel to Continue Growing)

Chevron (NYSE: CVX) is continuing its annual tradition of increasing its dividend. The oil giant recently announced that it's raising the payment by another 4%. That extends its growth streak to 39 consecutive years. This payment boost pushes its yield closer to 4%, well above the S&P 500's 1.1% yield.

The oil company can easily afford its high-yielding dividend. Further, Chevron has ample fuel to continue boosting its payout in the coming years. That makes the oil stock an attractive option for those seeking a lucrative and growing income stream.

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The cash flow machine

Chevron had an exceptional year in 2025. The oil giant closed its acquisition of Hess, started up several major projects, and made progress on securing future growth. That helped fuel record oil production of 3.7 million barrels of oil equivalent per day last year, up from 3.3 million in 2024.

The company's rising production, the bulk of which came from higher-margin sources, enabled it to generate $33.9 billion in cash flow from operations last year. That's up from $31.5 billion in 2024, even though the average oil price was $69 a barrel last year compared to $81 in 2024. Chevron produced a robust $20.1 billion in free cash flow after capital expenditures last year.

The oil giant produced more than enough cash to cover its dividend outlay, which totaled $12.8 billion last year. Overall, Chevron returned $27.1 billion in cash to shareholders in 2025, as it also repurchased $12.1 billion of its shares and bought $2.2 billion in Hess shares before closing the acquisition. The company funded the difference with its strong balance sheet. Chevron ended the year with a low 1.0 times leverage ratio.

Ample fuel to continue growing

Chevron made significant progress securing future growth drivers last year. The biggest was closing its long-delayed acquisition of Hess. That transaction provides the company with visible production and free cash flow growth into the 2030s from projects currently under construction and those in development. The company and its partners brought their fourth offshore project in Guyana online last year (Yellowtail). They also made a final investment decision (FID) on their seventh project (Hammerhead), which should start producing in 2029.

The oil company also reached an FID on the Leviathan Gas Expansion project in Israel, made several oil and gas discoveries worldwide, and secured several new exploration blocks in promising regions. These initiatives provide lots of runway to continue growing its oil and gas output in the coming years.

Additionally, Chevron made progress on its strategy to expand beyond oil and gas last year. It completed its Geismar renewable diesel plant, entered the U.S. lithium sector by acquiring lithium-rich acreage, and announced plans to provide power solutions to a data center project.

A high-octane dividend stock

Chevron generates substantial free cash flow, enabling it to continue paying its lucrative dividend. The oil giant expects to grow its already robust free cash flow at a more than 10% annual rate through 2030. That should give it plenty of fuel to continue increasing its high-yielding dividend, making it an excellent option for investors seeking a lucrative and steadily rising income stream.

Matt DiLallo has positions in Chevron. The Motley Fool has positions in and recommends Chevron. The Motley Fool has a disclosure policy.