It's a rollercoaster ride on Wall Street in 2011, and investors are understandably jumpy about the energy side of their portfolios. But one oil company that has quietly produced amazing results on the dividend front deserves some attention. Call it the 20-year dividend saga of Murphy Oil (Stock Quote: MUR).

Let's say right off the bat that the news isn't all good. In the short-term, the company's stock price has taken a real bath. So far in 2011, MUR has dropped precipitously, from $75 per share in January to $52 at the close of last week's trading.

Murphy Oil: At A Glance
  • Stock Price (September 16, 2011) - $52.21
  • One-Year Price Target - $74.40
  • 52-Week Trading Range - $47.24 - $78.16
  • Trading Volume – (September 16, 2011) - 2,385,550
  • Market Cap – $10.10 Billion
  • Price-To-Earnings – 10.58
  • Dividend Yield – 2.10%
  • Earnings-Per-Share - $1.60 (Q2, 2011)
  • Total Revenue - $8.72 billion (Q2, 2011)

But a longer-term view of the oil and gas company reveals a more flattering picture than that. Murphy has long been a favorite target for Wall Street analysts (although they disagree on where the stock price is heading – about $57 on the low end and $90 on the high end, according to Thompson/First Call).

Out of 15 analysts polled by Thompson, 11 currently have a Hold recommendation with three Buys and one Strong Buy. None of the analysts have placed Murphy on either the Underperform or Sell list in the last 30 days, a sign that Wall Street palm-readers think that MUR is undervalued, and should be trending upward--if the 15 analysts surveyed by Thompson/First Call know what they're talking about.

A big piece of that reasoning is that Murphy Oil has finished its divestiture of its North American refinery operations earlier this month, with the announcement that Valero Energy (Stock Price: VLO) will purchase Murphy's last remaining U.S. refinery for $525 million. That sale came on the heels of Calumet Specialty Products' (CLMT) buyout of Murphy's refinery business in Superior, Wis.

Now, Murphy joins the likes of Marathon Oil (Stock Price: MRO), Conoco-Phillips (Stock Price: COP); and Sunoco (Stock Quote: SUN) in getting rid of its entire refinery operations (only Murphy and Marathon have finished that job).

Next up for Murphy is its refineries across the Atlantic, where the company is expected to duplicate its efforts here in the U.S. "The announcement of the sale of Meraux is another execution step in our repositioning strategy to exit the refining business," Murphy's president and chief executive David M. Wood says. "We will now focus our attention on completing the sale of our assets in the U. K."

The idea--both here and in the U.K.--is to get more efficient, and that's what Murphy is setting out to do by divesting its American refinery business, a popular trend among big oil companies as demand for oil and gas among U.S. consumers is waning. Murphy is coming to grips with the notion that big integrated oil and gas companies are going the way of the dinosaur, as energy companies are increasingly deciding to go upstream or downstream in search of profits (even though Murphy’s refinery revenues jumped 64% on a year-to-year basis in the second quarter of 2011).

Right now, it's either production or refining--but not both.

The foundation for growth is certainly there – Murphy had a big second quarter thanks to a spike in natural gas sales and across-the-board price hikes in crude oil and natural gas.

Again, that puts Murphy in the company of a lot of oil providers who can tell a similar story. But what really separates Murphy from the pack is a propensity to give investors what they really want right now--regular dividend payouts.

You can see that story in the numbers, and the farther you pull back the lens the more clarity you get. Just go back to 1969 and you see two trends developing for MUR.

First, stock performance has increased during the past 42 years--by about 2,800%. But look at the second part of the Murphy stock performance story. If you add reinvested dividends to the mix, total returns skyrocket by 8,800%.

That is the kind of steady performance that investors are looking for these days. Sure, seeing stock prices rise is a prominent goal for equity investors, but it’s not the only one, and maybe not even the most important one. Over the long haul, reinvested dividends can have a significantly larger impact on total returns than just about any other performance benchmark.

But it's also the way that Murphy manages its dividend payouts that makes MUR an even stronger and more interesting investment story. The company's dividend yield is only 2.2%--compare that to Conoco-Phillips (3.90%) or Royal Dutch Shell (5.10%)--but Murphy’s dividend payout is as dependable as it gets. It’s paid out every year since 1983 and it’s added an annual average of 6% to that dividend through 2010.

In addition, MUR handles its dividend so astutely, that it really doesn't have a major impact on the company's bottom line. On an average annual basis during the past five years, Murphy’s total dividends only account for 20% of the company's net operating income.

That's the real story behind Murphy Oil.

While investors run around with their hair on fire looking for the next "sure growth" stock supernova (if such an animal even exists anymore) there are companies like Murphy that offer steady growth—the kind that's amplified by reinvested dividends year, after year, after year.