Wednesday, September 21, 2016

Dividend Growth Investing at Work - Excelling Towards Higher Dividends

Concept of how dividend growth investing works, Microsoft Office, Surface Pro
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Microsoft Corporation 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, the Board of Directors at Microsoft Corporation (MSFT) announced an increase in their quarterly dividend payment.  The dividend was increased to $0.39 from the previous payout of $0.36.  That's a 8.3% boost.  Microsoft is a Dividend Contender with 14 consecutive years of dividend increases.  Shares currently yield 2.75%.

Since I own 41.15 shares of Microsoft in my FI Portfolio this raise increased my forward 12-month dividends by $4.94.  This is the 4th dividend increase I've received from Microsoft since initiating a position in mid 2013.  Cumulatively my income from Microsoft has increased by 69.6%!!!  According to USInflationCalculator the total rate of inflation over the same time period is just 3.4% so Microsoft is crushing inflation in terms of increasing my income.



Microsoft's dividend history is a bit sketchy if you just look at a graph of the prior dividends.  Microsoft's first two payouts were annual dividends before switching to quarterly payouts.  Of course Microsoft's fiscal year ends at the end of June so even though the first two payouts covered different fiscal years they technically landed in the same calendar year.  That's just a quirk of the payouts and led to a decline in 2004 even though there wasn't a real one.


Aside from those few little hiccups, there's only been one "disappointing" year of dividend increases that came back in 2010. 


dividend growth investing, dividend growth rates, Microsoft Corporation
Microsoft Corporation Annual Dividend and Growth Rates Since 2003
Wrap Up

My forward dividends increased by $4.94 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 3.04% this raise is like I invested an extra $163 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 that's better than hearing news of a dividend increase.  So far this year I've received 39 increases from 31 companies increasing my forward 12-month dividends by $215.47.

My FI Portfolio's forward-12 month dividends increased to $5,477.56 and including my Loyal3 portfolio's forward dividends of $65.06 brings my total taxable account forward dividends to $5,542.62.  My Roth IRA's forward 12-month dividends are at $272.79.

Previous increases announced this month:

Verizon Communications (VZ)
Realty Income (O)
Phillip Morris (PM)

Do you own shares of Microsoft Corporation?  Was Microsoft's dividend increase a little light, just right or more than enough?

Please share your thoughts below.

Image courtesy of digitalart on FreeDigitalPhotos.net.

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