Wednesday, June 10, 2015
Dividend Growth Investing at Work - Expect More, Pay More?
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!
Target Corporation (TGT) announced they were increasing the quarterly dividend by $0.04 per share from $0.52 to $0.56. That's a 7.7% increase for those keeping track. This increase will mark the 44th consecutive year for Target of increasing the annual payout to shareholders. That's quite a hefty streak especially since that's covered all sorts of economic realities from booms to busts. Since I own 128.331 shares of Target, this will raise my forward dividends by $20.53.
Based on my portfolio's current yield of 3.08% this increase is like I invested an extra $666.56 in capital. Except that I didn't! One of the companies I own just decided to send more of their profits my way. That's how you can eventually reach the crossover point where you dividends received exceed your expenses. That's the beauty of the dividend growth investing strategy because you build up your dividends by fresh capital investment as well dividend increases from the companies you own.
My FI Portfolio's forward-12 month dividends are up to $5,902.31 and including my Loyal3 portfolio's forward dividends of $55.98 brings my total taxable account forward dividends to $5,958.29. With a couple more increases and another purchase or two my forward dividends should reach the $6,000 mark!
Image courtesy of digitalart on FreeDigitalPhotos.net.