Dividend Growth Investing at Work - A Raise Is A Raise No Matter How Small
On Tuesday the Board of Directors at Wal-Mart Stores, Inc. (WMT) announced yet another increase to their dividend payout. The dividend was increased by $0.01 to $0.51 per quarter. That's a decent 2.0% increase. This year will mark 44 consecutive years of dividend increases giving them the title of Dividend Champion. Shares currently yield 2.84% based on the new dividend rate.
This week I also took at look at Wal-Mart's valuation and you can check out the analysis here.
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 4th dividend increase that I've received from Wal-Mart since initiating a position in 2013. Cumulatively my Wal-Mart dividends have risen by 8.5% from dividend growth alone! According to USInflationCalculator the total rate of inflation over the same period is just 4.2%.
Wal-Mart's dividend growth has been phenomenal for a long time with raises routinely 15% per year. However, the last 4 increases have seen a noticeable decline with just $0.01 per quarter raises which has amounted to around 2.0% increases. Much of that is due to the stall in top line growth, the market for Wal-Mart stores is pretty much saturated, as well as their slow move to investment in e-commerce. That's led to a rising payout ratio that needs to be addressed.
|Wal-Mart Stores, Inc. (WMT) Annual Dividend and Rolling Dividend Growth Rates|
My forward dividends increased 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 2.89% this raise is like I invested an extra $88 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 8 dividend raises from the companies that I own increasing my forward dividends by $54.28.
Previous raises announced this month:
3M Company (MMM) (Stock Analysis)
PepsiCo, Inc. (PEP) (Stock Analysis)
The Coca-Cola Company (KO)
T. Rowe Price (TROW)
My FI Portfolio's forward-12 month dividends increased to $5,598.49. Including my Loyal3 portfolio's forward dividends of $69.09 brings my total taxable accounts dividends to $5,667.51. My Roth IRA's forward 12-month dividends are at $283.30.
Do you own shares of Wal-Mart? Do you think they can right the ship and return to at least mid to high single digit raises?
Please share your thoughts below.