ExxonMobil 's (NYSE:XOM) dividend policy hits all the right notes. The petroleum products giant offers a 2.7% yield, right in line with the average yield on the Dow Jones Industrial Average (DJINDICES:^DJI). And it's doing so despite crushing the Dow in straight-up market performance over the last decade.

XOM Chart

XOM data by YCharts.

Keeping the dividend strong in the face of skyrocketing share prices takes a serious commitment to payout growth, and Exxon delivers in spades there, too:

XOM Dividend Chart

XOM Dividend data by YCharts.

Exxon dividends have grown an average of 8.8% a year since 2004, not even taking a break for the 2008 economic meltdown. That's fantastic, and income investors love Exxon for good reason.

But does Exxon's dividend have any room to keep on growing from here?

At first glance, the answer looks like a slam-dunk "Yes, sir!" In 2013, Exxon spent $10.9 billion on dividend payments out of $32.6 billion in net income. That's a very comfortable 33% payout ratio, leaving lots of headroom for further growth.

But things get more complicated if you look at Exxon's cash flow instead. The company only saw $11.2 billion of free cash flow last year, thanks to a massive $33.7 billion in capital expenses. Oil exploration and exploitation is a capital-intensive game, especially as alternative methods such as fracking and converted oil sands become more important to Exxon's big picture.

XOM Cash Dividend Payout Ratio (TTM) Chart

XOM Cash Dividend Payout Ratio (TTM) data by YCharts.

So Exxon's cash payout ratio is spiking sky-high right now. The ratio actually shot past 100% in 2010, but came back down thanks to fiscal discipline and stabilizing global oil prices.

These spikes are something to keep in mind, but are not necessarily deal breakers. Exxon seems comfortable with raising dividend payments in good times or in bad, and it didn't let a lack of cash flow support hold the dividend back in 2010, either.

With an extremely liquid business model (no pun intended ... well, maybe just a little), Exxon has the freedom to let dividend payments and other cash flow items bob and weave a bit. Exxon also has $24 billion in cash reserves to tide over any short-term cash needs.

At the end of the day, Exxon has delivered annual dividend increases for 31 years running and management takes pride in shareholder-friendly policies. At the analyst day in early March, CEO Rex Tillerson pointed out that Exxon funneled 50% of operating cash flow into dividends and stock buybacks over the last five years -- doubling the payout ratio of closest competitor Chevron (NYSE:CVX).

Chevron is no slouch in the divided department, either. Committing that much more to dividends and buybacks when compared to a strong rival speaks volumes about Exxon's policies.

CVX Dividend Chart

CVX Dividend data by YCharts.

Exxon might have to pump the brakes on dividends when global oil supplies run out, but there's no reason to worry about dividend growth headroom until then. This company is committed to big and rising payouts, with or without support from strong cash flow.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.