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.

6 comments:

  1. Nice to see a raise in MDT. I have this on my general watch list, but I have never researched this company in detail. I will read up more!
    Thanks for sharing.
    D4s

    ReplyDelete
    Replies
    1. DivSon,

      I'm always happy to see dividend raises, but when a company as excellent as MDT can dish out a 25% increase then that gets me really excited.

      Thanks for stopping by!

      Delete
  2. Nice purchase! I will need to check out MDT more. I like what I am seeing. That Dividend chart of theirs looks great! Added it to my list. Thanks!

    Also, I love this line "you build up your dividends by fresh capital investment as well dividend increases from the companies you own". That is a pretty awesome thing isn't it?

    -Adam

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    Replies
    1. Adam,

      I haven't made a purchase in MDT in a long time but that doesn't mean the company doesn't keep working for me and in this case pay me more in dividends. I didn't expect to see a raise quite that hefty but I'm not going to turn it down at all. I've never received a 25% increase from my employer so I'm quite happy.

      Thanks for stopping by!

      Delete
  3. Nice raise, JC. Pains me that I had to sell this company because of my uncompetitive broker, who was making my pay the irish dividnd withholding taxes, even though we are exempt from it. Would have loved to own this company for the long haul.

    Enjoy the raise!
    R2R

    ReplyDelete
    Replies
    1. R2R,

      That's a shame that your broker wouldn't exempt it as they should have. I really like the HC space and MDT is one of the best.

      Thanks for stopping by!

      Delete