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Image source: ExxonMobil.

There are no guarantees when it comes to investing, but there are some things that we all take for granted. One of them is that companies with long track records of increasing dividends will continue to do so year in, year out. One of those companies is ExxonMobil (NYSE:XOM). For more than 30 years, the company has raised its dividend like clockwork, and hasn't cut its cash dividend since 1948. 

If there was any reason to think that ExxonMobil might not raise its dividend in 2016, it's that the last time the oil and gas market was in such rough shape was when we saw the company's last dividend growth transgression. So just to be sure that we can expect another dividend increase this coming year, let's take a look at what is working in the company's favor and what might cause it to hiccup. 

What's working in its favor
We can't simply assume that ExxonMobil will raise its dividend because that is what it has done for more than 30 years. Applying that logic to former Dividend Aristocrat stocks like Eastman Kodak didn't turn out so well. What really matters when it comes to ExxonMobil's dividend is the company's ability to generate free cash flow. What makes the company unique in the oil and gas space is that it is a vertically integrated business, meaning it has a hand in every aspect of the business from exploring new sources all the way to gas being pumped into your tank. 

These various business segments typically react to the price of oil in different ways, so one well-performing segment can help to offset weakness in another. This is a very important trait to have in today's oil and gas market. Even though oil prices have hit the company's production business unit hard, it has been able to make up for it with strength in its refining and chemical divisions. Even with oil prices for the entirety of 2015 in the $45-$50 range, ExxonMobil was still able to generate more than $26 billion in cash flow from operations over the first nine months of the year, which left about $6 billion to pay shareholder distributions. 

Another thing that might help ExxonMobil make another dividend hike is that there is some wiggle room in its spending habits. Next year's capital spending budget is expected to be a couple billion dollars fewer than what it was in 2015, and that is even before some of the realized savings from lower service contract rates. Also, management has repurchased $3.2 billion in shares so far this year and plans to buy back another $500 million in the fourth quarter.

If ExxonMobil's management can wring out some bigger savings in its capital budget and, if necessary, redeploy that $3.7 billion in share repurchases, then there should be adequate cash somewhere in the business to raise the dividend.

What's working against a dividend increase
The one thing that could be of concern is that ExxonMobil's budget has been pretty tight lately. Even with cash from operations and asset sales, the company has come up a little short on funding capital expenditures and shareholder returns in the first nine months of 2015, and there are very few signs that the fourth quarter will rapidly turn these trends around. 

Xom Ytd Cash

Image source: ExxonMobil investor presentation.

Also, keep in mind that a good chunk of that cash flow was with oil prices north of $50 per barrel in 2015. Even though the company is able to offset some weakness from production with chemical and refining gains, chances are it won't be able to fully cover that low of a price. 

While this is something worth keeping track of, it's hard to see this completely wiping out a chance at a dividend raise. ExxonMobil still maintains its AAA credit rating and a debt-to-capital ratio of 13.7%. As much as it may be painful to say after watching so many companies flounder with debt problems, ExxonMobil does have the financial strength to lean on the debt market a little to cover any short-term cash needs in 2016. 

If this market weakness were to continue into 2017, though, then having to tap the debt market to fund capital budgets and dividends will not look good.

What a Fool believes
As safe as ExxonMobil's dividend may seem, no investor should assume that it is a guarantee in a market where oil prices are now close to 70% off their highs in mid-2014. Based on the company's relative strength in the industry, a steadier stream of cash from its vertically integrated business model, and some wiggle room in its budget and shareholder repurchase program, it appears that investors can sleep well knowing that another dividend increase is likely to happen in 2016.

Tyler Crowe owns shares of ExxonMobil. You can follow him at Fool.com or on Twitter @TylerCroweFool.

The Motley Fool owns shares of ExxonMobil. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.