The wealth-building power of compound interest will never cease to amaze me. It's a story of patience and attention to detail, where small, short-term differences add up to massive divergence over decades. And in the end, the biggest winners don't always deliver the fattest share-price returns.

Let's take a closer look at the dividend-paying habits of diversified energy giant Chevron . The stock has crushed fellow energy titan ExxonMobil and the wider Dow Jones Industrial Average over the last decade. This is true whether or not you assume dividends were reinvested into buying more stock along the way, but the payouts sure boost your total returns by a welcome margin.

CVX Chart


CVX data by YCharts.

It's hard to complain about a 275% 10-year return, which works out to an annual gain of 13.9%. The Dow's rise over the same period was a far smaller 83% jump, or 6.2% annualized.

But throw in the reinvested-dividends effect, and Chevron's return swells to a mighty 413% -- a 17.8% compound average growth rate. The Dow's average return under the same circumstances only rose to 8.8% per year.

Viewed through another lens, Chevron's payouts boosted its total returns by 50%, while the average Dow stock's payouts only added 33%. Exxon actually lags its blue-chip peers in this department, because its dividends only juiced total returns by 25%.

The secret to Chevron's shareholder-friendly success? Relentless payout increases. Share prices have been rising sky-high, but management kept pace with equally fantastic dividend boosts. The result: surprisingly steady dividend yields through thick and thin.

CVX Dividend Chart

CVX Dividend data by YCharts.

If you're on the lookout for high-yielding stocks, The Motley Fool has compiled a special free report outlining our nine top dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here.

The article How Dividends Change the Game for Chevron Investors originally appeared on Fool.com.

Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders' bio and holdings or follow him on Twitter and Google+. Motley Fool newsletter services have recommended buying shares of Chevron. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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