Texas saying: "Big hat; no cattle." Translation: All talk; nothing to show but the hat.

Texas-based regulated utility holding company and Motley Fool Income Investor recommendation TXU (NYSE:TXU) holds the distinction of catching the pre-downsized AFL-CIO's attention. Its 2004 Executive PayWatch list of the five highest-paid CEOs included TXU's John Wilder, with his jaw-dropping $55 million booty.

A quick check of the company's earnings growth does not explain the big pay package. Over the past five years, earnings have decreased 10.2% annually. Analysts expect the next five years to show annual growth of 7% -- well behind the 10.6% compound annual growth rate for the S&P 500.

Before you start to feel sorry for TXU shareholders because they've paid too much for a CEO, use this chart to look back at the stock's performance over the past decade. For the first six years, it's sideways: above, below, and around $40 a share. In October 2002, the company's European operations collapsed, and the stock plunged almost 75% overnight. The stock had recovered to almost $25 a share when the company hired Wilder in February 2004. Today, the stock is sitting near an all-time record high of $89, up roughly $3 from yesterday's close.

So, was a pay package that (among other things) paid out 1.5 million shares fairly quickly, too much? In my opinion, it was way too much. But for shareholders, Wilder has delivered the goods.

In October 2004, Fool contributor Ben McClure wrote about the Wilder-led company and its comeback strategy of "rationalizing, restructuring, and restoring profitability." TXU was on the road to recovery.

Foolish writer Tim Beyers covered 2005's first-quarter net loss of $622 million -- and liked what he saw after subtracting all the charges. There was $183 million, or $0.67 per share, in profits from ongoing businesses. That's more than 400% higher than the $34 million, or $0.11 per share, the company booked in operating income during 2003's fourth quarter.

Today's second-quarter earnings report has more good news. Operational earnings, which exclude special items and discontinued operations, soared 208% over last year's comparable quarter. TXU revised its earnings outlook of $6.25 for 2005 to $6.45 -- a big leap from last year's earnings of $2.82 a share. Better yet, the company sees growth in the range of 16% to 20% for 2006 (and analysts are projecting earnings of $7.51 a share).

TXU, at today's price, clocks in somewhere around 12 times estimated 2006 earnings and yields 2.1%. For comparison, fellow sunshine belt utility -- and fellow Motley Fool Income Investor recommendation -- Southern Company (NYSE:SO) is priced at nearly 16 times 2006 earnings and yields a much more robust 5.25%. Serving customers farther north, American Electric Power (NYSE:AEP) trades for 15 times forward earnings and yields 3.7%.

Based on those comparisons, TXU can still expand its multiple -- and, as it hits higher earnings plateaus, it will certainly be able to increase its dividend more than the long-term target of 5% annually. As this point, TXU's CEO can comfortably fill his "Don't Mess With Texas" hat after taking this company back to its Texas roots and, in the process, producing a Texas-sized return.

Are you looking for great companies with outstanding dividends that offer both long-term earnings and dividend growth? Take a free trial to Motley Fool Income Investor, and let Mathew Emmert narrow down that search for you.

Fool contributor W.D. Crotty owns shares in Southern Company and missed the oversized gains at TXU. Click here to see the Fool's disclosure policy.