One Raise at a Time | Visa Doubles Down

Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Visa for the second 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 Wednesday of last week the Board of Directors at Visa, Inc. (V) announced another increase to their quarterly dividend payment.  The dividend was increased from $0.21 per share up to $0.25 per share.  That's a huge 19.1% raise.  Visa is a Dividend Challenger with 11 consecutive years of dividend increases.  Shares currently yield 0.70% based on the new annualized payout.

This is great news for investors because Visa had already announced a 7.7% increase in late January.  And that raise came on the heels of a 18.2% announced last October.  All told the payment for December will be 28.2% higher than last year's December payout.  That's exactly what I want to see from my low yield-high growth investments!

Since I own 38.513 shares of Visa in my FI Portfolio this raise increased my forward 12-month dividends by $6.16.  This is the 7th dividend increase I've received from Visa since initiating a position in August 2013.  Cumulatively, the organic dividend growth from Visa has totaled a whopping 203% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 8.4%.  

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

Visa is still in the early stages of their dividend growth streak; however, I fully believe they are a Champion in the making.  Visa very much fits the mold of the low yield-high growth company that I like to have in my portfolio to compliment the medium yield-medium growth and high yield-low growth.  I think most balanced dividend growth portfolios should include companies across that spectrum.

Visa's dividend growth has been fantastic with the "worst" year over year growth, if you can even call it that, of 17.0%.  Even more impressive is that all rolling 5-year growth rates are above 20% annualized.  Visa still has plenty of room to grow organically and the low payout ratio should continue to fuel dividend growth greater than 10% per year for the foreseeable future.

The 1-, 3- and 5-year rolling dividend growth rates since 2008 can be found in the following chart.  

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

Wrap Up

This raise increased my forward dividends by $6.16 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.92% this raise is like I invested an extra $210 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 49 dividend increases from 43 of the companies in my FI Portfolio combining to increase my forward 12-month dividends by $458.89.  

My FI Portfolio's forward-12 month dividends increased to $6,782.34.  Including my FolioFirst portfolio's forward dividends of $90.97 brings my total taxable accounts dividends to $6,873.31.  My Roth IRA's forward 12-month dividends remain at $396.62.

Do you own shares of Visa?  Do you like that double increase as much as I do?

Please share your thoughts below.