Warren Buffett and Bill Gates are certainly wealthy individuals, but in the annals of history they’re not the richest men of their time – not even close. This coveted distinction belongs to John D. Rockefeller, co-founder and leader of the great Standard Oil Company.
How expansive was Rockefeller’s fortune? If measured in today’s dollars, Rockefeller would be worth over three times more than Gates and nearly four times more than Buffett. What’s more, Rockefeller employed a simple strategy to amass such great wealth – dividends. Specifically, the dividends paid by his own creation, the Standard Oil Company.
On the subject of dividends, Rockefeller offered a memorable quote: “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” Standard Oil was a prodigious dividend payer, and it remains one to this today.
Investors can still collect Standard Oil dividends just like the richest man who ever lived, John D. Rockefeller.
Two of Rockefeller’s oil creations emerged to form what was at the time the world’s largest corporation. In 1999, the Standard Oil of New Jersey and Standard Oil of New York merged to create ExxonMobil (NYSE: XOM). The two constituent parts of this energy behemoth have paid a dividend every year since being spun off from the Standard Oil Trust in 1911.
In the past 31 years, the Exxon-Mobil combination has grown its vaulted dividend at an average rate of 6.3%. In the past 10 years, the rate has actually picked up pace, averaging 8.8%. This premier dividend grower yields 2.6% today. That yield will surely expand in the future on continued dividend growth.
For higher current income, investors can buy shares of Standard Oil (California). The company known today as Chevron (NYSE: CVX) offers a 3.4% yield.
Like ExxonMobil, Chevron has a century-long history of dividend payouts. In addition to offering a higher yield than ExxonMobil, Chevron offers a higher dividend-growth rate. In the past 10 years, Chevron has hiked its dividend 9.8% annually.
For a little more yield, investors can buy shares of former Standard Oil subsidiary Continental Oil and Transportation. Shares of ConocoPhillips (NYSE: COP) yield 3.9%.
ConocoPhillips lacks the size and global presence of ExxonMobil and Chevron, but it shares their commitment to dividend payouts and dividend growth. ConocoPhillips has decades of dividend payouts behind it. In the past decade, the dividend has grown at an 11.6% annual rate – better than both ExxonMobil and Chevron.
For higher immediate income, investors can buy units of Buckeye Partners (NYSE: BPL), another former Standard Oil subsidiary. Buckeye is organized as a master limited partnership; by law it must distribute all its income to investors. At the current quarterly payout rate of $1.09 a unit, Buckeye distributes $4.36 annually to investors, which produces a generous 5.7% yield.
But unlike it’s former Standard Oil siblings, Buckeye doesn’t wait a year before raising its distribution. In the past 20 quarters, Buckeye Partners has raised its payout 15 times.
The richest man who ever lived understood that the cash that flows to investors – the dividend – matters most. Rockefeller’s modus was to develop energy assets and grow Standard Oil such that it could maximize its dividends. Many of Standard Oil’s constituent parts adhere to Rockefeller’s ethos, and that’s good news for income investors.
Income From Pipelines: the Safest Energy Investment
Most investors hope to “catch a flier” on small, risky exploration companies who usually don’t have a drop of oil in their wells. But in our experience, people don’t build pipelines until they know when and how much oil they’ll pump. Which makes pipeline stocks the least risky investments in the entire energy sector. No pipes – no oil. Click here to read my full write-up on two American pipeline stocks paying big (and growing) dividends.