Friday, September 30, 2016

Dividend Growth Investing at Work - I'm Lovin' It!

Concept of how dividend growth investing works, Big Mac, I'm Lovin' It, McDonalds
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks McDonald's for another pay raise!
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?  Dividend growth investing is far from a get rich quick investment strategy, rather you need to remain focused on the long term goal to be successful.

Yesterday I got a bit of a surprise dividend raise which is always a welcomed sight.  The Board of Directors at McDonald's (MCD) announced an increase in their quarterly dividend payment.  The dividend was increased to $0.94.  That's a solid 5.6% boost from the previous payout of $0.89.  McDonald's is a Dividend Champion with 40 consecutive years of dividend increases.  

The reason that this was a bit of a surprise is that last year management pushed the dividend increase announcement back until November while they were in the middle of their turnaround.  Previously raises had been announced in September, but I wasn't sure whether management would go back to the old schedule or keep with the new one.  Well, the new one won and I got a surprise raise.  Shares currently yield 3.28%.

Since I own 84.906 shares of McDonald's in my FI Portfolio this raise increased my forward 12-month dividends by $16.98.  This is the 5th dividend increase I've received from McDonald's since initiating a position in mid 2012.  Cumulatively my income from McDonald's has increased by 34%!!!  According to USInflationCalculator the total rate of inflation over the same time period is just 4.9% so McDonald's is crushing inflation in terms of increasing my income.

If you just look at McDonald's dividend payment chart it appears that there were some big changes from McDonald's.  There were massive increases in the early 2000's and then a massive cut from 2007 to 2008.  However, McDonald's went from quarterly payouts, then swapped to annual payouts and then back to quarterly payouts.  When you look at each annual payment then the dividend growth streak dates back to 1976.

dividend growth investing, dividend growth rates, McDonald's, MCD
McDonald's (MCD) Annual Dividend and Rolling Dividend Growth Rates Since 1976
An interactive graphical version of the previous chart can be found here.

Wrap Up

My forward dividends increased by $16.98 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.98% this raise is like I invested an extra $570 in capital.  Except that I didn't!  One of the companies I own just decided to send more cash 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!  The beauty of the dividend growth investing strategy is that you build up your dividends through fresh capital investment as well dividend increases from the companies you own.

For a dividend growth investor there's not much better than hearing news of a dividend increase.  So far this year I've received 40 increases from 32 companies increasing my forward 12-month dividends by $232.45.

My FI Portfolio's forward-12 month dividends increased to $5,491.09 and including my Loyal3 portfolio's forward dividends of $65.21 brings my total taxable account forward dividends to $5,556.31.  My Roth IRA's forward 12-month dividends are at $240.84.

Previous increases announced this month:

Verizon Communications (VZ)
Realty Income (O)
Phillip Morris (PM)
Microsoft Corporation (MCD)

Do you own shares of McDonald's?  Was the 5.6% raise not enough, too much or just right?

Please share your thoughts below.

Image courtesy of digitalart on


  1. PiP -

    Yessir! Lovin' it, that's for DAMN sure! Stronger increase here, plus announced a bigger buy back program. Looking forward to the Golden Arches to continue to be strong going forward!


  2. Been reading a few posts about the MCD raise. I'm quite pleased too as you can imagine. Just think that about two years ago MCD was "dead" and it was all about PNRA, CMG and the like. MCD has proven decade after decade that it may stumble here and there but can adapt to new consumer tastes.

  3. If you want to learn how to make passive income, it can help you:

  4. I own MCD -- I welcome any dividend increase that beats the inflation rate!

    Take care and happy investing!