Chevron (CVX 0.53%) has been an outstanding stock this year. Shares of the oil giant have gained more than 30% in a year when the S&P 500 has lost nearly 10% of its value. The company is capitalizing on higher oil and gas prices, enabling it to produce a gusher of free cash flow. 

That's giving Chevron more money to allocate on behalf of its investors. The oil company continues to do a great job utilizing its cash to grow value for shareholders. Here are four ways it uses its cash to benefit investors.

A long history of raises

Chevron's CFO, Pierre Breber, discussed the company's success in delivering on its financial priorities during the second-quarter conference call. The CFO noted that "the first financial priority is to grow the dividend." He pointed out, "We've done that for 35 consecutive years, increased it 6% earlier this year. It's up 20% since right before COVID, and it's doubled since 2010."

That's a stellar track record for any company, let alone one operating in the volatile oil sector. Chevron is one of only 65 S&P 500 listed companies -- and one of two energy stocks -- that have increased its dividend for more than 25 straight years, earning it the distinction of a Dividend Aristocrat. These haven't been token increases either. Breber noted that the company doubled its dividend payment over the last decade, which has been an extremely volatile period for oil prices.

Investing in growing the business

Breber stated that the second priority is "to invest and grow both traditional and new energy." The company has significantly ramped its investments this year, spending 80% more in the first half than it did in the year-ago period. These investments grew its production in the high-margin Permian Basin by 15% over the past year, enabling it to provide the country with more oil when it needed it. Chevron also approved developing its Ballymore project in the Gulf of Mexico to supply more oil in the coming years.

Chevron has also grown its low-carbon businesses to start supplying the country with the energy it will need in the future. It's now one of the country's leading producers of renewable fuels after spending more than $3 billion to buy Renewable Energy Group. Chevron also partnered with Bunge on a renewable fuels joint venture and has started advancing its carbon capture and storage business. These investments could pay big dividends for investors down the road as the country transitions to lower carbon fuel sources.

Maintaining a strong financial profile

Breber noted that "the third is to maintain a strong balance sheet." He pointed out that the company paid down debt for the fifth straight quarter. As a result, its net debt ratio is down to 8%. "That's well below our mid-cycle guidance of 20% to 25%," according to Breber.

By strengthening its balance sheet, Chevron will have more financial flexibility in the future. It will allow the oil company to utilize its excess debt capacity to continue investing and returning cash to shareholders if oil prices slump. It also positions the company to capitalize on potential acquisition opportunities should they emerge.

Steadily reducing the share count

Finally, Breber said, " When we have cash in excess of those first three priorities, we buy back shares, and we intend to do it ratably over the cycle." The CFO noted that the company had repurchased almost $60 billion of its stock over the last two decades, purchasing it at an average price of around $90 a share. That's well below the current price in the $150s.

Breber noted that Chevron recently boosted its share repurchase guidance to $15 billion a year. That's enough to retire 1% of its outstanding shares each quarter. The company expects to maintain that repurchase rate even as oil prices cool off. Breber stated that Chevron intends to "lever back up our balance sheet closer to that 20% to 25% guidance range" by taking on debt to continue repurchasing shares so that it can take advantage of lower prices in the future.

A four-way focused on creating shareholder value

Chevron uses its oil-fueled cash flows to pay a steadily rising dividend, strategically expand its operations, maintain a fortress-like balance sheet, and repurchase shares. This four-fold approach should enrich its investors over the long term. The company's strategy makes it stand out in the oil patch, where many of its peers are more focused on growing their size than growing shareholder value.