Friday, May 1, 2015

Dividend Growth Investing at Work - 2 More Increases

Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of the companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!

First up was IBM.  IBM had another disappointing round of earnings with their 12th consecutive quarter of revenue declines.  Although the cloud computing division saw solid improvement and on a currency neutral basis revenues were flat.  Dividend growth investors are being rewarded with a dividend increase.  And a big one at that!  IBM increased the quarterly payment from $1.10 to $1.30.  That's an excellent 18.2% increase.  I expected a much smaller raise this year while IBM continues its transformation from a hardware to software and service company.  I don't know about all of you but I've never once received an 18.2% increase from my employer.  Since I own 30.220 shares of IBM this will increase my forward dividends by $24.18.

Later in the week it was ExxonMobil's turn.  The decline in oil prices has been well documented but I think the oil majors will weather this storm just fine.  ExxonMobil rewarded shareholders with another dividend increase.  The quarterly dividend was raised from $0.69 to $0.73.  That's a 5.8% increase.  Unfortunately, raises this good are still hard to come by as well from an employer but they come quite regularly from excellent companies.  Since I own 52.744 shares of XOM this will increase my forward dividends by $8.44.

The two increases combined to raise my forward 12-month dividends by $32.62.  Based on my portfolio's current yield of 3.01% these increases are like I invested an extra $1,083.72 in capital.  Except I didn't.  Some of the companies that I own just decided to pay me more.  That's how you can eventually reach the crossover point where you dividends received exceed your expenses.

My FI Portfolio's forward-12 month dividends are up to $5,647.45 and including my Loyal3 portfolio's forward dividends of $55.98 brings my total taxable account forward dividends to $5,703.43.

8 comments:

  1. Thank you for the post JC. What a wonderful feeling receiving these raises. Just goes to show that investing and quality companies backs up our strategy. Slow and steady, we'll beat this game and get the hell out of the rat race. I'm with you all the way bud. Take care of yourself my friend and wish us the best. Have a nice weekend. Cheers bud.

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    1. DH,

      It's always great getting raises. I don't think anyone's ever turned one down. DGI is the most intuitive investment strategy for the core of just about everyone's portfolio that I can think of. There's definitely quicker ways to make money, but the slow and steady method of building wealth is what will work for the vast majority of people.

      Thanks for stopping by!

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  2. Both IBM and XOM are holdings in DivGro -- got to be happy with dividend raises without having to lift a finger! Thanks for the update and take care!

    FerdiS

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    1. Ferdi,

      You mean you want to pay me more for doing absolutely nothing different? Absolutely!

      Thanks for stopping by!

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  3. IBM and XOM are two companies that have been beaten up a little by an irrational market. Great buys right now!

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    1. FV,

      Both IBM and XOM have seen their share prices recover some but I wouldn't mind adding to both. XOM more than IBM only because I think XOM will rebound quicker than IBM. IBM is having internal difficulties with the transition from hardware to software/cloud that will take time to fix. XOM's problems are external due to commodity prices that will rebound over the next 6-18 months.

      Thanks for stopping by!

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  4. It's a great feeling getting raises so often, this is such an awesome strategy! IBM's was especially unexpectedly large and very welcome. I'm a little disappointed that CVX wants to wait to raise their dividend, but I expect they will before the end of the year.

    Thanks for sharing and take it easy!

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    1. Ryan,

      I didn't see the magnitude of IBM's raise coming at all. Pretty surprising actually. XOM's was actually on the higher end of where I expected it to be so I'm happy about that. CVX's decision not to raise the dividend is a bit concerning but I expect there will at least be a token increase later this year.

      Thanks for stopping by!

      Delete