Wednesday, July 1, 2015
Dividend Growth Investing at Work - Keeping Your Portfolio Healthy with Medtronic
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 said companies. Not going and doing R&D for new products or technology. Not selling any products. Not managing any employees or inventory. Not making sales calls. 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! I mean who really doesn't like getting a raise for doing nothing?
I missed this one earlier in the month because frankly I was too busy dealing with my son, but this increase was so generous that I just had to report on it even though I'm way late to the party. On June 19th Medtronic (MDT) announced they were increasing the quarterly dividend by $0.075 from $0.305 to $0.38. That's a whopping 24.6% increase!!! This increase will be the 38th consecutive year of increasing the annual payout to shareholders. That's an impressive raise and an even more impressive streak. That's why the healthcare industry is one of my favorite long-term plays. It's essentially recession proof because I don't see too many people foregoing medical care just because the economy is in the tank during a recession. And of course everyone knows our population is aging which means there's a long growth curve for the health care sector. Since I own 92.126 shares of Medtronic, this will raise my forward annual dividends by $27.64.
Based on my portfolio's current yield of 3.16% this increase is like I invested an extra $874.68 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 $5,995.54 and including my Loyal3 portfolio's forward dividends of $56.92 brings my total taxable account forward dividends to $6,052.49.
Image courtesy of digitalart on FreeDigitalPhotos.net.