Monday, December 21, 2015

Dividend Growth Investing at Work - Dialing Up More Dividends


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 doesn't like getting a raise for doing nothing?

December is a quiet month for dividend increases for the holdings in my FI Portfolio.  To make matters worse the companies that do announce increases during the month typically give rather paltry raises since they offer higher starting yields.  That was the case through last Friday when I'd only received increases from Realty Income and W.P. Carey that added a total of $1.33 to my forward dividends and continued with AT&T announcing a somewhat disappointing raise as well.

On Friday, the Board of Directors at AT&T approved a $0.01 increase to their quarterly dividend to a new rate of $0.48.  The raise works out to just a 2.13% increase.  Since I own 51.088 shares of AT&T this increase grew my forward 12-month dividends by $2.04.  The raise wasn't exactly impressive but it did mark their 32nd consecutive year of rising dividends which is a hefty streak.  However, there's only been the token $0.01 increase each year since the end of 2008 which isn't all that inspiring.  Luckily the starting yield is solid at 5.71%.

I mentioned above that I was disappointed with the increase from AT&T.  I know it's hard to get disappointed with a raise but I was expecting management to reward shareholders a bit more this time around.  After completing the DirecTV acquisition and with some infrastructure build out being complete the cash flow situation at AT&T has improved.  I was thinking that management would reward shareholders that have been patient and accepting of the token $0.01 increases that have been the norm for the last several years.  I only though they'd bump it up by $0.02 per share, but apparently that was wishful thinking.  With the current yield of 5.71% and 2% increases that still works out to between 7-8% annual returns so AT&T is still holding its place within my portfolio.

My forward dividends increased by $2.04 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 3.23% this raise is like I invested an extra $63.27 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 your dividends received exceed your expenses.  That's DIVIDEND GROWTH INVESTING AT WORK!  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.

With AT&T announcing their increase that brings a close to the expected increases to be announced.  In total my portfolio saw 3 increases that increased my forward 12-month dividends by just $3.37.  But a raise is a raise and my dividends did increase.  Unfortunately January doesn't look to bring much relief to the dividend increases with just one expected raise, HCP, among my current holdings.  Every raise though gets me a closer to reaching financial independence.

My FI Portfolio's forward-12 month dividends are up to $5,650.09 and including my Loyal3 portfolio's forward dividends of $61.01 brings my total taxable account forward dividends to $5,711.10.

Were you happy with the dividend raises any of your holdings gave you this month?

Image courtesy of digitalart on FreeDigitalPhotos.net.

4 comments:

  1. Like you, I own O, WPC, and T -- token raises but better than nothing or a cut, right!?

    I received 7%+ increases from DIS and PFE this month. Those are more like it, in my view!

    Take care PIP
    FerdiS, DivGro

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    1. Ferdi,

      Those three were definitely a lot better than what KMI delivered for me this month.

      I own a small bit of DIS in my Loyal3 portfolio and the 7% increase was a lot better.

      Thanks for stopping by!

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  2. I really like the way you look at dividend increases - it's an interesting approach to show how much capital you would have had to add in order to 'get' the dividend growth.

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    1. Ben,

      I think that's what really helps to show the power of DGI. Each dividend increase effectively reduces your required investment capital which is great in my book.

      Thanks for stopping by!

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