(Adds details of board meeting)
By Ernest Scheyder
HOUSTON, April 27 (Reuters) - Exxon Mobil Corp raised its quarterly dividend by 3 percent on Wednesday, a day after Standard & Poor's downgraded the U.S. oil and gas company citing its generous payouts to shareholders.
It was the smallest increase since at least the first quarter of 2006, when the dividend rose 10 percent, according to Thomson Reuters data.
The downgrade of the oil giant was the first by S&P in more than 70 years. It was flagged by the ratings agency last week and did not come as a surprise Wednesday morning as Exxon's board met to approve the dividend increase and review quarterly results, which are set to be released on Friday.
The board had halted a massive share repurchase program on Feb. 2, the same day S&P warned publicly a downgrade was possible. The repurchase program had dwarfed the dividend payout for years, and its cancellation was the first sign by Exxon's board of less-generous remuneration to shareholders.
Exxon has raised its dividend each of the past 34 years. The increase this year came as the company and its peers are fighting the perception they spend too much on shareholders and not enough strengthening its balancing sheet and building oil reserves.
Filings with U.S. regulators show that at a combined $325 billion in dividends and repurchases, Exxon's spending on shareholders in the last 11 years has exceeded by nearly 20 percent its outlays of $271.7 billion for new property, plant and equipment over the same period.
S&P on Tuesday cut Exxon's top-tier credit rating by one notch to "AA+" from "AAA," saying it was concerned the world's largest publicly traded oil company would rather enrich shareholders than cull debt.
Exxon raised its payout to 75 cents from 73 cents. The dividend will be payable on June 10 to shareholders of record as of May 13.
Shares of Exxon gained 0.8 percent to close Wednesday at $88.46 per share. (Reporting by Ernest Scheyder; Editing by Richard Chang and Andrew Hay)