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!

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  1. Almost there PIP. Congrats my friend. Investing especially as a DGI is a wonderful road to travel on. It's awesome. I know how you feel. Keep it up and best wishes to you and your family PiP. Take care.

  2. Nice! Nothing beats a good dividend increase. I got TGT and CAT on back-to-back days.

    And nothing but the best of wishes to you, your wife, and the little guy.

  3. Wow! Getting there! Very cool! Congrats on the raise too, that is indeed the power on dividend growth investing.



  4. That's a great way to look at it. I've only thought of the incremental dividend. It's actually a bigger mental number to think how much more you would have needed to invest to get there to begin with.

  5. Hey JC,

    Congrats on the dividend raise dude! 44 years is a great streak. I find looking at how much more capital you'd have had to invest to earn this much more in dividends is one of the most eye-opening perks of dividend growth investing. Like you said, you're dividend raise means you don't have to invest an additional $666 towards your dividend goals. Good foresight!

    Best of luck

  6. I heard about this today while listening to Bloomberg radio at work. That's another great raise from TGT, congrats !

  7. I was very happy with this, nice write up. Glad to be a fellow shareholder!

  8. Go TGT! I really like the way you expressed the equivalent investment amount that would be needed to secure the increased dividend:
    "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!"

    Like you, I have TGT in my portfolio... looking forward to be a shareholder for many more years!

  9. I like the exact thing about dividend investing. I watch my "calendar" on my blog to see when I receive the dividend and I am happy seeing it being deposited to my account. But I want more! I am so inpatient seeing it rolling in small increments. I wish my payouts get larger. So large, that I can buy a new dividend stock or accumulate into a stock every month. But one day this will happen. I like your view on dividends! I also look at the income reinvested that it is what I could save contributing and spending it with my family, for example.

  10. You hit the nail on the head with that comment "Based on my portfolio's current yield of 3.08% this increase is like I invested an extra $666.56 in capital"

    The power of dividend growth is very important. This is why I invest in companies that grow dividends - because to get growth in my passive income, I don't need to add any new capital. And if I do, that level of passive income is turbocharging its growth!

    Good luck in your dividend investing journey!

    Dividend Growth Investor