Friday, March 17, 2017

Dividend Growth Investing at Work - Realty Income to the Rescue

Concept of how dividend growth investing works, health care, real estate
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Realty Income for the dividend increase!
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.
On Tuesday of this week the Board of Directors at Realty Income Corporation (O) approved yet another increase in their storied dividend history.  The dividend payout was raised to $0.211 from $0.2105 or 0.24%.  Assuming the dividend is maintained at this level for the remainder of 2017 this will represent 24 consecutive years of dividend growth giving them the title of Dividend Contender.  Shares currently yield 4.26% based on the new dividend rate.

The increase might not seem like much, but you have to keep in mind that Realty Income gives multiple smaller increases throughout the year as opposed to just one bigger increase.  Compared to the comparable payment from 2016 the dividend has risen 6.03%.  

Since I own 92.339 shares of Realty Income in my FI Portfolio this raise increased my forward 12-month dividends by $0.55.  This is the 4th consecutive year of dividend increases that I've received from Realty Income since initiating a position in mid-2013.  This is also the 19th dividend increase that Realty Income has provided over that time.  Cumulatively my Realty Income dividends have risen by 16.2% from dividend growth alone!  According to USInflationCalculator the total rate of inflation over the same period is just 4.6%.  




A larger version of the chart can be found here.

One of the great things about Realty Income, besides the monthly dividends and the multiple raises throughout the year, is the consistency.  Realty Income might not provide stellar dividend growth that you'll brag about, but the steady and consistent 5% annual increase is wonderful to see.
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Realty Income Corporation (O) Annual Dividend and Rolling Dividend Growth Rates
*2017's annual dividend assumes 8 additional payments at the $0.211 per share per month rate.  

An interactive graphical version of the previous chart can be found here.

Wrap Up

My forward dividends increased by $0.55 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.91% this raise is like I invested an extra $19 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.

Thus far in 2017 I've received 12 dividend increases from 11 companies held in my FI Portfolio increasing my forward 12-month dividends by $65.37.

My FI Portfolio's forward-12 month dividends increased to $5,616.40.  Including my Loyal3 portfolio's forward dividends of $69.23 brings my total taxable accounts dividends to $5,685.63.  My Roth IRA's forward 12-month dividends remain at $283.94.

Previous Raises This Month

Toronto Dominion Bank (TD)

Do you own shares of Realty Income?  Do you think it's an attractive purchase at these levels?

Please share your thoughts below.

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5 comments:

  1. O is one of my favorite dividend paying stocks and my favorite MONTHLY dividend paying stock. The increase may be small but it's still something and the monthly dividend compound make it more powerful.
    For more, visit us at TheDividendLife.com

    ReplyDelete
    Replies
    1. TDL,

      Realty Income has a lot going for it and while the dividend growth might only be 4-6% per year the long term that's still above inflation and there's a lot to be said about the steady rise year after year. Plus you have to love a company that trademarked "The Monthly Dividend Company".

      Thanks for stopping by!

      Delete
  2. Every little bit helps, no doubt. One day this will start to really help that forward income and (hopefully) you will be financially independent.

    ReplyDelete
    Replies
    1. BHL,

      Realty Income's increases might not be something I'd brag about, but they add up over time. In the almost 4 years I've owned the company they've boosted my pay 16.2%. Plus those monthly dividends sure are nice.

      Thanks for stopping by!

      Delete
  3. All this and a monthly payout. Gotta love this REIT.

    ReplyDelete