Thursday, September 17, 2015

Dividend Growth Investing at Work - Plenty of Increases to Keep Us All Happy


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 step away from the dividend growth investing and blogging world for a couple weeks and come back to a flurry of dividends increases for my FI Portfolio.  That's one of the secrets of dividend growth investing.  Just because you take a break doesn't mean that the companies you own and all of their employees take a break right along with you.  Nope, they continue to work and churn out higher profits and in turn that means higher dividends.

Care Capital Properties (CCP):

First up was Care Capital Properties , the skilled nursing facilities spinoff from Ventas (VTR).  CCP announced their first ever dividend on September 2nd coming in at $0.57 per share.  Since I own 5 shares of CCP from the spinoff my dividends increased by $10.00.  Shares of CCP are currently offering a 7.05% yield based on the annual dividend rate.

Verizon Communications (VZ):

Next to announce was Verizon who announced an increase of 2.73% to their quarterly dividend on September 3rd.  The quarterly dividend rate was increased from $0.55 to $0.565.  Not a huge increase from Verizon but it's a serviceable one and about on par with inflation.  Since I own 43 shares of Verizon, the new dividend rate will increase my annual dividends by $2.58.  Shares of Verizon are currently offering a 5.05% yield based on the new annual dividend rate.

Realty Income (O):

Realty Income, or "The Monthly Dividend Company" as they call themselves, also decided to pay investors even more money.  On September 9th Realty Income announced the new monthly payout would be $0.1905 per share.  That's just a 0.26% increase from the previous monthly rate of $0.19.  Since Realty Income likes to give smaller raises multiple times throughout the year it's better to look at year over year growth to determine how well it's performing.  The October 2014 payout was $0.1831042 so the new monthly rate shows an increase of 4.04%.  I currently own 91.685 shares of O so my annual dividends increased by $0.55.  Shares of Realty Income are currently offering a 4.94% dividend yield based on the new annual dividend rate.

Phillip Morris International (PM):

On September 16th Phillip Morris International decided to get in on the action as well raising the quarterly dividend from $1.00 to $1.02.  That's just a 2.00% increase over the previous quarterly rate.  I do have to say this one was a bit disappointing but with the leveraged balance sheet, high payout ratio, and strong US dollar leading to currency headwinds I wasn't expecting a great increase.  The increase is enough to keep me happy for another year to see how management navigates the current economic environment.  Since I own 62.61 shares of PM my forward dividends increased by $5.01.  Shares of PM are currently offering a 4.98% yield based on the new quarterly dividend rate.

Microsoft Corporation (MSFT):

The best increase came from Microsoft Corporation that also raised their dividend on September 16th.  The new quarterly dividend rate is $0.36 a 16.1% increase from the previous quarterly rate of $0.31 per share.  Since I own 41.15 shares of Microsoft my forward dividends increased by $8.23.  Shares of MSFT are currently offering a 3.24% yield based on the new quarterly dividend rate.

Ventas (VTR):

Unfortunately my portfolio wasn't immune to a dividend decrease.  On September 3rd, Ventas  decreased the quarterly dividend from $0.79 to $0.73.  That's a 7.59% decrease from the previous quarterly rate.  This decreased my forward dividends by $5.35.  However, the decrease is due to the above mentioned spinoff of Care Capital Properties (CCP).  The combined quarterly payout of the two companies, $0.8725, actually represents a 10.44% over the previous quarterly rate of $0.79 for Ventas.  Ventas continues to be a solid option for REIT investors.  Shares of VTR are currently offering a 5.34% yield based on the new quarterly dividend rate.

All told there were FIVE increases for my portfolio and one decrease/technical increase.  My forward dividends increased by $21.02 with me doing nothing.  That's right, absolutely nothing to contribute to those companies.  Based on my portfolio's current yield of 3.34% these raises are like I invested an extra $629 in capital.  Except that I didn't!  Several 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 your 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.

Even better is that the dividend increase party of September shouldn't be over yet.  There's still half a month to go and based on the increase announcements from last year Starbucks (SBUX), YUM Brands (YUM), and McDonald's Corporation (MCD)* should all be joining in on the fun.

My FI Portfolio's forward-12 month dividends are up to $5,969.28 and including my Loyal3 portfolio's forward dividends of $58.30 brings my total taxable account forward dividends to $6,027.59.

Do you own any of these companies?  Are you satisfied with the dividend increases?  

*McDonald's Corporation announced their Q4 dividend declaration will be in November instead of September to better analyze their capital allocation.

Image courtesy of digitalart on FreeDigitalPhotos.net.

13 comments:

  1. Just curious, do you ever go with high yield instead of div-growth?

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    Replies
    1. FV,

      I try to focus mainly on dividend growth because I want to build a fairly stable and reliable portfolio that I don't have to spend too much time on to manage. Although I do try and own companies all across the yield and growth spectrum.

      I'd think you would have to pay a lot more attention to the high yield plays because there's usually a reason that the companies are yielding that high.

      Thanks for stopping by!

      Delete
  2. Thanks for sharing your update, JC. Congrats on the div income.

    R2R

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    1. R2R,

      Dividend increases are some of my favorite things. More money for doing nothing but owning high quality companies. That's something I can get behind.

      Thanks for stopping by!

      Delete
  3. I have some VZ shares, I was happy to see the dividend increase, but I'm also concern when the company says the earning for 2016 will be flat. VZ has just swallow AOL media, and having plan to do more mobile video to keep up with the internet of things. I'm long VZ, but it's a bit concerning though.

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    Replies
    1. vivianne,

      It'll be interesting to see how VZ incorporates AOL into the existing business. But I'm quite bullish on the ISPs and data providers over the long term. I haven't seen anything that's led me to believe that our mobile data consumption is going to waiver moving forward. The increase was nice and I'm more than happy with an increase like that with as much as they have going on. Like T I expect some elevated dividend growth over the coming years but VZ's goal is to also pay down the large amount of debt they have from the VZW purchase from VOD last year. I'm always glad to hear about companies I own reducing debt. Afterall you can't go bankrupt if you don't owe anyone anything. I'll have to stop by and check out your blog sometime this week.

      Thanks for stopping by!

      Delete
  4. Another one that increased last week was Lions Gate Films. It's more along the "growth" end of dividend growth, but 29% dividend growth is pretty great.

    McDonalds dividend increase should also come up next week...looking forward to that one.

    Eric

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    Replies
    1. Retire29,

      29% growth is pretty impressive. I don't follow LGF but maybe I'll have to look into them. MSFT was the only impressive grower so far through September but I expect pretty solid increases from both SBUX and YUM to close out the month. MCD said they won't announce their next dividend until November so we'll have to wait a bit longer for theirs.

      Thanks for stopping by!

      Delete
  5. Nice post compiling all the announcements. I hold PM from this list. Also, what do you think of MSFT's huge increase? The stock is currently trading at a high P/E of ~30 and looks to be a bit expensive...

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    1. DGJ,

      I won't be adding shares here but I'll still gladly hold on my existing position in MSFT. They still have a huge cash hoard and I expect to continue to see 10%+ annual dividend growth for the next few years. I think they're making headway in mobile which they seriously fell behind on but there's plenty of opportunities for them moving forward.

      Thanks for stopping by!

      Delete
  6. This comment has been removed by the author.

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  7. Thanks for consolidating this into one list. I own two of these so I am happy to get a raise :-). Long PM, O.

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    Replies
    1. IH,

      PM and O are two solid long term choices that I expect to continue to dish out higher dividends for investors. I'll have to stop by your blog this coming week now that I'm back into the blogging world.

      Thanks for stopping by!

      Delete