One Raise At A Time | Dividend Raises Are Sweet

Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Hershey for the first raise of many!

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 July 24th the Board of Directors at The Hershey Company (HSY) raised up their dividend payment to shareholders.  The dividend was increased from $0.656 up to $0.722 per share per quarter.  That's a strong 10.1% increase.  Hershey has grown their dividend payment for 8 consecutive years giving them the title of Dividend Challenger.  Shares currently yield 2.95% based on the new annualized payout.

The new dividend will be paid out on September 14, 2018 to shareholders of record as of August 24th.  

Since I own 11 shares of Hershey in my FI Portfolio this raise increased my forward 12-month dividends by $2.90.  This is the 4th dividend increase I've received from Hershey since initiating a position in July 2015.  Over that time Hershey has grown the dividend payment by 35% cumulatively.  According to US Inflation Calculator the total rate of inflation over that same time is just 6.3% so Hershey is handily outpacing inflation.

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

One thing you'll notice is that Hershey's dividend growth flatlined in 2009.  Given the economic situation at the time I'm more than willing to overlook that slight blemish to their record.  While the current dividend growth streak is just 8 years long prior to the freeze Hershey had increased dividends since at least 1993.  Despite the freeze in 2009 the 5- and 10-year rolling dividend growth rates still look fantastic ins the upper single digits.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1993 can be found in the following chart.  

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

*2018's dividend assumes the new quarterly payout of $0.722 per share is maintained for the rest of the year.

Wrap Up

This raise increased my forward dividends by $2.90 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.93% this raise is like I invested an extra $100 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 36 dividend increases from 34 of the companies in my FI Portfolio combining to increase my forward 12-month dividends by $315.34.  

My FI Portfolio's forward-12 month dividends increased to $6,370.89.  Including my FolioFirst portfolio's forward dividends of $87.05 brings my total taxable accounts dividends to $6,457.94.  My Roth IRA's forward 12-month dividends are at $344.86.

Do you own Hershey in your own portfolio?  Do you typically sell shares during a dividend freeze or hold on and give the company a chance to navigate the rough waters?

Please share your thoughts below.