Wednesday, October 19, 2016

Dividend Growth Investing at Work - Another 10%+ Raise

Concept of how dividend growth investing works, health care, OHI, REIT
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Visa for a fantastic 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.

One of my favorite business models can be thought of as a "middle man" type of business.  These businesses are essential to whatever industry they serve and essentially just get to put their hands on something and take it somewhere else for a fee.  Visa (V) encapsulates that to a "T".  

Yesterday, the Board of Directors at Visa announced a dividend increase.  The dividend was boosted to $0.165 from $0.14 for a whopping 17.8%.  Visa is a Dividend Challenger with 8 consecutive years of dividend growth.  Shares currently yield 0.80%.

Since I own 68.136 shares of Visa in my FI Portfolio this raise increased my forward 12-month dividends by $6.81.  This is the 4th dividend increase I've received from Visa since initiating a position in August 2013.  Cumulatively my income from Omega has increased by 100%!!!  That's right a double in about 3 years!  According to USInflationCalculator the total rate of inflation over the same time period is just 3.6% so to say I'm happy about Visa's total dividend growth would be an understatement.




A larger version of the chart can be found here.

That's an impressive string of increases from Visa and the rate of growth is absolutely fantastic.

dividend growth investing, dividend growth rates, Visa, V
Visa (V) Annual Dividend and Rolling Dividend Growth Rates Since 2008
An interactive graphical version of the previous chart can be found here.

Visa is set to announced earnings on 10/24 and I'm looking forward to see how they've done with the integration of Visa Europe and what the fully inclusive numbers look like.  Visa continues to be one of my highest conviction companies for continued growth of their business and of course their dividend.  Unfortunately it rarely goes on sale so it's difficult to get in at good values.  Although their growth trajectory does allow you a bit of leeway on demanding a true value position. 

Wrap Up


My forward dividends increased by $6.81 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 3.02% this raise is like I invested an extra $225 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 43 increases from 34 companies increasing my forward 12-month dividends by $250.73.

My FI Portfolio's forward-12 month dividends increased to $5,429.11 and including my Loyal3 portfolio's forward dividends of $65.50 brings my total taxable account forward dividends to $5,494.61.  My Roth IRA's forward 12-month dividends are at $240.84.

Previous Raises this Month:
Omega Healthcare Investors (OHI)

Expected Raises in October:

Aflac (AFL)
Starbucks (SBUX)

Do you own shares of Visa?  Do you expect, as I do, that double digit raises can be expected for the next decade?

Please share your thoughts below.

Image courtesy of digitalart on FreeDigitalPhotos.net.

No comments:

Post a Comment