ConocoPhillips' (NYSE:COP) new strategy continues to pay big dividends for its shareholders. That was evident in its recent announcement that it will provide investors with a massive dividend increase as well as keep buying back its stock. It's now the company's fourth dividend increase since launching its new strategy in late 2016. It likely won't be the last, given the company's focus on sending an increasing supply of its cash flow back to its investors.

A big-time boost

ConocoPhillips unveiled its 2020 capital return plans this week. The highlight was a monster 38% increase in its quarterly dividend. That will boost the yield up past 3%. That's a much higher level than most of its upstream-focused peers, which typically offer yields of around 1%.

A person handing over cash.

Image source: Getty Images.

This year's raise is much larger than the company has typically provided its investors since it reset its dividend in early 2016. The company's first increase from that reset level came a year later when it raised its payout by 6%. It followed that up with two more last year, boosting the payout by 7.5% in February and another 7% in December. With its latest raise, the dividend is now 68% above where it was in early 2016, though it's still about 43% below its peak level in 2015.

Driving ConocoPhillips' massive dividend increase is the "significant transformation our company has undergone over the past few years," according to CEO Ryan Lance. He noted: "Since announcing our returns-focused value proposition in 2016, we have improved our underlying performance drivers and lowered our sustaining price for the business. Given these enhancements, we are confident we can fund a higher, growing cash dividend, while maintaining a substantial, consistent buyback program."

Speaking of share repurchases, ConocoPhillips also announced its intention to buy back another $3 billion in stock next year. On the one hand, that's down from the $3.5 billion it plans to repurchase this year. However, the total cash return will remain the same, since the company's increased dividend will cost it an additional $500 million next year.

Oil-fueled dividend growth abounds

ConocoPhillips is one of several U.S. oil companies that have provided their investors with big-time dividend increases this year. Pioneer Natural Resources (NYSE:PXD) has been among the leaders. The Permian Basin-focused oil company doubled its dividend in February as part of its plan to return more cash to investors. The company would go on to boost its payout again in August, this time by another 175%. With that latest increase, Pioneer's dividend has grown by a jaw-dropping 2,100% since the company started boosting it in 2017. However, even with that big-time increase, Pioneer's dividend yield is only 0.7%, which is well below the average of stocks in the S&P 500.

EOG Resources (NYSE:EOG), meanwhile, has also made it a priority to increase its payout. In May, the company boosted its dividend by 31%. Add that to the two increases it delivered in 2018, and EOG's payout has jumped 72% in the past two years. That's all part of the company's plan to increase its dividend yield closer to the S&P 500's average of 2%. With its payout currently around 1.6%, the company's dividend still has more high-octane growth ahead.

The reason a growing number of oil companies are making dividend growth a priority is that investors are growing tired of the oil sector's chronic underperformance. Oil producers thought that production growth would fuel higher stock prices. Instead, all that excess output weighed on crude prices, which pushed down their stock market values. That failed strategy is leading a growing number of producers to allocate more cash to shareholder returns instead of to growth in hopes of creating more value for their investors. It's an approach that worked well for ConocoPhillips last year, which is why the company and its peers are sticking with a strategy that's delivering results.

An increasingly attractive option for income seekers

ConocoPhillips is working hard to win back dividend investors following its decision to reset the payout level in early 2016 to better cope with lower crude prices. With its latest raise, the company once again pays a well-above-average dividend. Meanwhile, given its priority of returning more cash to investors, the payout should continue growing in the coming years. That makes it a much more compelling option for income-focused investors to consider buying.