One Raise at a Time | YUM
On January 26th the Board of Directors at YUM Brands (YUM) approved an increase to their quarterly dividend payment. The dividend was increased from $0.30 per share to $0.36. That's a huge 20% increase from this great company. YUM Brands has no dividend title since they decreased the dividend after spinning off YUM China (YUMC); however, they did get up to a 12 year streak of dividend increases which bodes well for the future. Shares currently yield 1.74% based on the new annualized payout.
Since I own 42.099 shares of YUM Brands in my FI Portfolio this raise increased my forward 12-month dividends by $10.10. This is the 4th dividend increase I've received from YUM Brands, plus 1 decrease, since initiating a position in 2014. Unfortunately due to the dividend cut after the YUMC spinoff my dividends from YUM Brands have decreased by 2.7%. According to US Inflation Calculator the cumulative rate of inflation over that same time is just 4.1%. So YUM Brands still has some work to do in order to surpass inflation although they are gaining ground quickly.
A full screen version of this chart can be found here.
I like to examine the dividend growth rates that a company has doled out over time in order to see whether dividend growth is holding steady, increasing or decreasing. Looking at this gives you an idea of the possible future direction of dividend growth.
YUM Brands had historically been a solid dividend grower with annual dividend increases well above 10% per year. Despite the dividend cut after the YUMC spinoff the 5 year and 10 year dividend growth rates are still nicely positive. For now I'll just hold on to my shares and wait to see if YUM gets back to their consistent dividend growth. So far so good though.
A full screen interactive version can be found here.
Let me know in the comments if you prefer the chart view of the dividend growth rates or the table view.
My forward dividends increased by $10.10 with me doing nothing. That's right, absolutely nothing to contribute to their operations. Based on my portfolio's current yield of 2.68% this raise is like I invested an extra $377 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.
So far in 2018 I've received 5 dividend increases from the companies owned in my FI Portfolio raising my forward 12-month dividends by $45.38.
My FI Portfolio's forward-12 month dividends increased to $5,906.89. Including my FolioFirst portfolio's forward dividends of $77.19 brings my total taxable accounts dividends to $5,949.02. My Roth IRA's forward 12-month dividends are at $336.46.
Do you own shares of YUM Brands? How do you handle dividend cuts like YUM Brands? Sell and find something else or wait it out?
Please share your thoughts below.