Phillips 66 (PSX Quick QuotePSX - Free Report) recently announced the receipt of approval from its board of directors to increase the quarterly dividend payout.

The diversified energy manufacturing and logistics company reported a new dividend of 92 cents per share, representing an increase of 2%. The increased dividend will likely be paid on Dec 1, to shareholders of record as of the close of business on Nov 17.

Since inception in 2012, the company has been successful in hiking dividends 10 times. This suggests that the compound annual dividend growth rate over the period is 18%.

Phillips 66 has also been focusing on strengthening its balance sheet as reflected that the company has cut down its debt balance by $1 billion this year. The company will continue to strengthen its balance sheet and revealed the repayment on Sep 24 of $500 million of outstanding borrowings under its 364-day delayed draw term loan agreement. The company added that the delayed draw term loan was due in November 2023.

In a broader sense, the news reflects that energy business is gradually recovering from the impact of the coronavirus pandemic. Cash flows of companies in the energy space increased significantly compared to the pandemic-hit last year, and firms are again rewarding shareholders’ capital through dividend increases. Three other major energy companies that hiked dividends this year are APA Corporation (APA Quick QuoteAPA - Free Report) , Chevron Corporation (CVX Quick QuoteCVX - Free Report) and ConocoPhillips (COP Quick QuoteCOP - Free Report) .