Wednesday, July 22, 2015

Dividend Growth Investing at Work - A Trifecta of Raises


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?

Last week was a busy week for dividend increases and there was even one that I didn't expect to get.  July has turned out to be a great month for increases with a total of five now being announced.  Wednesday started out with a double dividend increase.  First up was Omega Healthcare Investors (OHI) raising the dividend by $0.01 to $0.55 per quarter.  That's just a 1.9% increase from the previous quarterly payment; however, this is the 12th consecutive quarterly increase which is quite an impressive feat.  Year over year the dividend has increased 7.8%.  Not bad for a company with a current yield of 6.1%.  Since I own 70 shares of OHI, the new dividend payout will increase my annual dividends by $2.80.

Also on Wednesday we got word from Kinder Morgan, Inc. (KMI) that they were increasing their dividend as well.  The new quarterly dividend payment was raised $0.01 to $0.49.  That's a 2.1% increase from the previous payment.  Kinder Morgan is another one of those companies that likes to give smaller increases throughout the year as opposed to one larger increase once a year.  Year over year KMI has increased their payment by 14.0%.  Like OHI, that's very impressive considering this company is currently yielding 5.3%.  Since I own 218.453 shares of KMI, the new dividend payout will increase my annual dividends by $8.74.

The one increase I wasn't really expecting to hear about was another energy company, ConocoPhillips (COP).  ExxonMobil had raised their dividend like clockwork earlier this year, but the other US integrated major Chevron (CVX) kept theirs steady.  COP also has a history of freezing the dividend during low oil price environments and given that this is the first one since spinning off Phillips 66 (PSX), I expected that to be the case this year.  However, that's not the case.  Management felt strongly enough about the company to increase the dividend by $0.01 to $0.74.  (Notice a trend in the increases this from this past week?)  Since I own 17.988 shares of COP, the new dividend payout will increase my annual dividend by $0.72.  Not much but it's better than nothing!

None of these increases alone were all that spectacular, but considering two of them tend to increase the dividend on a quarterly basis and the other is an O&G exploration company that is dealing with a very tough environment, I'm just happy to see increases.  Paying me more for doing absolutely nothing else is always a good thing in my book.  Plus when you multiply that across a portfolio that's approaching $200k, the rise in dividends from increases alone really starts to add up.

In total my annual dividends increased by $12.26 from these three increases.  Based on my portfolio's current yield of 3.11% these raises are like I invested an extra $394 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 $6,023.11 and including my Loyal3 portfolio's forward dividends of $56.18 brings my total taxable account forward dividends to $6,079.29.

Image courtesy of digitalart on FreeDigitalPhotos.net.

7 comments:

  1. Thanks for the update PIP. I'm a big owner of KMI and it is my third largest dividend paycheck (After Apple and my Corp Bond ETF). That increases pushes KMI into my "very exclusive" $400 club.

    I got bit by my first ever dividend CUT yesterday. HCLP cutting from .675 to .475--that dropped my monthly income by like $3. That was very disappointing.

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    1. Retire29,

      That's a heck of a position in AAPL. The $400 club is pretty nice. Although I'll be glad when my KMI position gets a few buddies up there.

      I had a cut from ARCP and honestly should have closed the position before the cut. There's was the accounting scandal going on but I was paying attention to more important things than my portfolio. It'll be interesting to see how that company turns itself around as they turn into more of an operating REIT instead of trying to grow and grow.

      Thanks for stopping by!

      Delete
  2. Hey JC,

    Congrats on the dividend increases. I've been eyeing KMI a bit and would like to own it, but find I've burned pretty badly on energy since I've started investing. Gold too. Man, that yield is really nice though. Keep up the great work, it's really nice to see you writing more lately!

    Best regards
    DB

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    Replies
    1. DB,

      Dividend increases are always nice but it's even better when they get stacked together and multiple companies raise them up around the same time. I think KMI is a keeper if you're bullish on domestic drilling. If you think that's going to stay depressed then I'd stay away from KMI. Well, obviously! It feels great to write more and be more active in the community.

      Thanks for stopping by!

      Delete
  3. Hearing about dividend increases for stocks I own in DivGro is my favorite things about dividend growth investing. Of the stocks you mention, I own OHI and COP. Thanks for the update!

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    Replies
    1. Ferdi,

      It's always great to hear about a dividend increase. There's not much more that I like from an financial perspective than to hear that. I was surprised to see a raise from COP this time around, expected them to push an increase until later in the year.

      Thanks for stopping by!

      Delete
  4. JC,

    Dividend increases are by far the best thing at dividend growth investing and they're almost as exciting as receiving the payment itself. Glad to see you've had your fair shares of raises recently, especially when you consider that they're worth almost $400 of newly invested capital.

    Keep it up,
    NMW

    ReplyDelete