One Raise at a Time | Shopping For Dividends

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Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Wal-Mart for yet another 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 the Board of Directors at Wal-Mart (WMT) announced an increase to their quarterly dividend payout.  The dividend was increased from $0.51 per share up to $0.52 per share.  That's an underwhelming 2.0% raise.  Wal-Mart is a Dividend Champion with 44 consecutive years of dividend increases.  Shares currently yield 2.24% based on the new annualized payout.

Since I own 63.415 shares of Wal-Mart in my FI Portfolio this raise increased my forward 12-month dividends by $2.54.  This is the 5th dividend increase I've received from Wal-Mart since initiating a position in June 2013.  Cumulatively, the organic dividend growth from Wal-Mart has totaled to 10.6% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is just 6.4%.  Wal-Mart has increased my purchasing power 66% faster than inflation; however, I do have to say that I'm a bit disappointed with the lackluster dividend growth.

A full screen version of this chart can be found here.

It should come as no surprise to see a company that's as large as Wal-Mart to have their dividend growth slow over time.  That's to be expected.  However, in the case of Wal-Mart it wasn't so much of a slowing of dividend growth as it was a case of dividend growth falling off a cliff.  Starting in 2014 Wal-Mart's dividends have just inched forward each year by $0.01.  I'm patient enough to let things play out while management executes on their online/direct to consumer strategy, but I was expecting to see a bit larger dividend growth this year as their online presence has started to take off.

Wal-Mart's 1-, 3-, 5- and 10-year rolling dividend growth rates since 1993 can be found in the following chart.  As you can see Wal-Mart's dividend growth has slowed to a crawl for the past 5 years.

A full screen version of this chart can be found here.

*2018's dividend assumes the new quarterly payout of $0.52 per share is maintained for the rest of the year.

Wrap Up

This raise increased my forward dividends by $2.54 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.82% this raise is like I invested an extra $90 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 2018 I've received 12 dividend increases combining to increase my forward 12-month dividends by $135.44.  

My FI Portfolio's forward-12 month dividends increased to $6,022.77.  Including my FolioFirst portfolio's forward dividends of $78.49 brings my total taxable accounts dividends to $6,101.26.  My Roth IRA's forward 12-month dividends remain at $336.46.

Do you own shares of Wal-Mart?  How patient are you with your investments when dividend growth slows or even stalls?  Do you give them time to work things out or look for other investment opportunities?

Please share your thoughts below.


  1. Hi JC, I have been a holder of WMT for years. I would like to see bigger dividend increases, but understand they have been using their free cash flow to invest in e-commerce. I think they are slowly figuring it out and are becoming a formidable competitor to Amazon. I just can’t bet against them. I will hold and be patient. Tom


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