Leading oilfield services company SLB (SLB 0.08%) continues to see an uptick in demand for its drilling services and equipment, fueled by strong oil and gas market conditions. This improvement enabled the company to produce excellent fourth-quarter results.

Those market conditions also gave the company the cash flow and confidence to boost its dividend again. Here's a closer look at the oilfield service company's quarter and upsized dividend payment.

Drilling down into SLB's quarter

SLB, formerly Schlumberger, recently posted excellent fourth-quarter results. The world leader in providing oilfield services hauled in $7.9 billion of revenue during the period. That was 5% higher than the third quarter and up 27% from the year-ago period. Meanwhile, the company posted earnings of $0.74 per share, up 17% sequentially and 76% from the prior year period. The company generated $1.6 billion of cash flow from operations in the quarter and roughly $900 million of free cash flow. 

That capped an exceptional year for the oil stock. Revenue grew 23% in 2022 to $28.1 billion. Meanwhile, earnings per share skyrocketed 70% to $2.18. The company also generated $3.7 billion of cash flow from operations for the year.

SLB benefited from oil companies' growing demand for equipment and drilling services to help them maintain and expand their output. CEO Olivier Le Peuch stated in the earnings press release: "We delivered strong fourth-quarter results and concluded a remarkable year for SLB with great success. Revenue grew across all divisions and geographical areas, with robust year-end sales in digital and particularly strong service activity offshore and in the Middle East where we witnessed a significant inflection as capacity expansion projects mobilized."

The company expects conditions to remain robust. The CEO commented:

"The fourth quarter affirmed a distinctive new phase in the upcycle...These activity dynamics, improved pricing, and our commercial success--particularly in the Middle East, offshore, and North American markets--combine to set a very strong foundation for outperformance in 2023...Looking ahead, we believe the macro backdrop and market fundamentals that underpin a strong multi-year upcycle for energy remain very compelling in oil and gas and in low-carbon energy resources."

The confidence to provide another big dividend boost

SLB's strong results and optimistic outlook for what's ahead led the oilfield services giant to increase its quarterly dividend payment by 43% to $0.25 per share. That will boost its dividend yield from 1.2% to 1.8%, putting it slightly above average (the S&P 500's dividend yield is 1.7%). 

However, it's below the nearly 4% yield across the oil patch. The sector has paid out a gusher of dividends this year as many producers followed Devon Energy's (DVN 0.84%) lead and instituted fixed-plus-variable payout frameworks. That has enabled investors to earn yields of 8% (in Devon's case) or more.

This dividend boost marks the company's second sizable increase in the past year (SLB gave investors a 40% raise last April). The oilfield services giant has also started returning additional cash to shareholders by restarting its share buyback plan.

More dividend growth seems likely. The company is generating significant free cash flow after paying its dividend, allowing it also to repurchase shares and reduce debt. Meanwhile, cash flow should keep growing in the future. The company's legacy oilfield services business is experiencing an upswing, and it's also seeing strong growth from its transition technology portfolio focused on the shift to cleaner alternatives. Revenue from that portfolio grew more than 30% last year and should hit the $1 billion milestone this year. These growth drivers should enable SLB to produce robust cash flow to support growing shareholder returns. 

Compelling if you're seeking total returns

SLB's supersized dividend will push its yield above the market's average. However, it's well below the big-time payouts offered by others in the oil patch, like Devon Energy, so yield-focused investors probably won't find it attractive.

However, that doesn't mean dividend investors should dismiss SLB's rapidly rising payout. It should continue expanding at a healthy clip in the future. That could give the company the power to produce market-beating total returns, which makes it a potentially compelling choice for those seeking income and upside potential.