Thursday, July 16, 2015

Dividend Growth Investing at Work - Cummins Continues to Keep the Dividend Engine Running

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?

Earlier this week, Cummins, Inc. (CMI) announced another huge dividend increase.  This latest increase raised the quarterly dividend from $0.78 to $0.975 per share.  That's a whopping 25% increase.  Even better is that this latest increase marked the 10th consecutive year with an increase in the dividend moving Cummins into Contender status on David Fish's CCC list.  Cummins has also put up some spectacular dividend growth rates.  Assuming the new payout is made for the last two payments of this year, the 1 year growth rate is 24.9%, 3 year is at 24.9%, 5 year is 32.0%, and the 10 year growth rate is at 27.9%.  I don't think you could complain about any of those figures.

Since I own 23.318 shares of CMI, the new dividend will increase my annual dividends by $18.19.  Thanks to the massive dividend growth rates from Cummins the YOC for my position is now 4.43%.  Based on my portfolio's current yield of 3.10% this increase is like I invested an extra $587 in capital.  Except that I didn't!  One of the companies I own just decided to send more of the 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 $5,985.55 and including my Loyal3 portfolio's forward dividends of $56.21 brings my total taxable account forward dividends to $6,041.77.

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  1. PIP,

    Thanks for this update. It is helpful to have the dividend increase information for stocks that I am watching. Congrats on having this as a holding!

    DGI Novice

    1. DGI Novice,

      It's always great to see dividend increase announcements from the companies we own or want to own. After all it's said that the most secure dividend is the one that's just been raised.

      Thanks for stopping by and if you have any questions feel free to ask.

  2. Replies
    1. FV,

      I have just a small position in CMI, but the dividend growth they've provide has been massive.

      Thanks for stopping by!

  3. This is great news for CMI investors! I bought my shares in April and couldn't be happier with this raise! As you say, its wonderful to be paid more for doing nothing more than owning a great company!


    1. Ferdi,

      Great news indeed! Glad to be a fellow owner. It sure is great getting paid more without having to do any work for it.

      Thanks for stopping by!