Dividend Growth Investing at Work - Just 55 Consecutive Years of Increases
April is now in the books and it was a truly stellar month. Six different companies owned in my FI Portfolio announced dividend increases during the month.
On Thursday of last week, the Board of Directors at Johnson & Johnson (JNJ) announced an increase to their dividend. The quarterly dividend was raised from $0.80 to $0.84. That works out to a 5.0% increase which is a bit smaller than I expected with my guess being a dividend rate of $0.85. Johnson & Johnson has now given owners a pay raise for 55 consecutive years giving them the title of Dividend Champion. Shares currently yield 2.72% based on the new annualized dividend.
Since I own 75.616 shares of Johnson & Johnson in my FI Portfolio this raise increased my forward 12-month dividends by $12.10. This is the 4th dividend increase that I've received since becoming an owner in late 2013. Through organic dividend growth alone Johnson & Johnson has increased my annual dividend payments by 27% cumulatively. According to US Inflation Calculator the rate of inflation over that same time is just 4.7%.
A full screen version of this chart can be found here.
Johnson & Johnson has long been the quintessential dividend growth stock and for good reason. For starters the dividend increases have been coming like clockwork for 55 years now. While companies can amass a lengthy streak with just token increases each year, Johnson & Johnson has been sharing the wealth with dividend growth far outpacing inflation over time.
Recently though dividend growth has slowed down to around the mid single digits annually. That's primarily due to Johnson & Johnson's dividend previously growing faster than earnings which led to a higher payout ratio over time. Nevertheless, if mid-single digit annual growth continues I'll be more than happy as a shareholder.
My forward dividends increased by $12.10 with me doing nothing. That's right, absolutely nothing to contribute to their operations. Based on my portfolio's current yield of 2.94% this raise is like I invested an extra $411 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 19 dividend increases from 17 companies held in my FI Portfolio increasing my forward 12-month dividends by $110.52.
My FI Portfolio's forward-12 month dividends increased to $5,664.72. Including my Loyal3 portfolio's forward dividends of $70.26 brings my total taxable accounts dividends to $5,734.98. My Roth IRA's forward 12-month dividends are at $286.85.
Previous Increases This Month:
Procter & Gamble (PG)
Omega Healthcare Investors (OHI)
Unilever plc (UL)
Do you own shares of Johnson & Johnson? Do you think dividend growth will rebound back to the high single digits or stay in the mid single digit range?
Please share your thoughts below.