Dividend increases are almost always good news for investors. They represent solid proof that management has high hopes for future growth. Over the past three years, Apache (APA 2.06%) has boosted its dividend each year: 13% in 2012, 18% in 2013, and now an even bigger increase of 25% this year. Who knows, maybe a 30% dividend hike is on its way in 2015, as booming output from the Central and Permian Basin plays push Apache's cash flow upwards. 

Each year the payout grows by a larger and larger amount, pointing toward management's commitment to providing the best returns possible to its beloved shareholders. What makes the timing of the increase even better is this that it happened just a few days before earnings are set to be released, which could point to this quarter being better than expected.

For those who like to gauge whether or not a company will meet or miss earnings based on past reports, here it is: Out of the past eight quarters, Apache has beaten guidance twice, met once, and missed five times. Maybe this is a sign times are changing, or maybe it's to compensate for a bad quarter. But the past is the past, and investors should be focused on what Apache has to offer going forward.

Apache's growth
To find growth, Apache has had to make strategic investments around the world to truly reward investors. One very important part of Apache's growth story relies on the Permian Basin. After increasing the average number of rigs in the area from five in 2010 to 41 in 2013, production has soared, and free cash flow from the Permian Basin is being handed back to investors.

Are these production gains going to slow? Well, with an estimated 4.3 billion barrels of recoverable resources, mostly crude, located in Apache's Permian Basin assets, I would say no. Keep in mind that only 800 million barrels of that are classified as proven, so further development in the area could radically boost the value of Apache's assets and its free cash flow.

Output growth is key, and as Apache continues to develop the Permian Basin, the possibilities seem endless. Apache could pump out 131,250 boe/d for over 90 years, according to reserve life estimates. 

Dividend preference
Apache's 1.3% yield may look meager compared to others in the industry, such as Chevron (CVX 0.59%), which pays out a yield around 3.6%. But if Apache can keep growing its dividend, it could start to gain a following among income investors who would have otherwise ignored it. Oil and gas companies that can offer stable growth in addition to steady income are great ways to play volatile markets, such as the ones we are dealing with now.

Chevron is investing $10 billion in the Congo to grow output by 140,000 boe/d. That growth would substantially grow free cash flow and add nicely to the 120,000 boe/d in additional output coming online from the Mafumeira Sul project, which is expected to be completed by 2015. While Chevron's production growth has been lackluster recently, the next few years could mark a significant turnaround in Chevron's upstream operations.

Foolish conclusion
Regardless of whether or not Apache's dividend increase is an indicator of what to expect in its upcoming earnings release, a payout that keeps on growing year after year is a very bullish sign. Apache has a long way to go before it can catch up to its high-yielding counterparts like Chevron, but through sizable investments in the Permian Basin and Central Region, Apache has the potential to offer growth as well as income.