Dividend Growth Investing at Work - 6 Years and Counting
May has been a busy month and somehow it's just about over with. It was so busy in fact that I missed one of my favorite things about investing: a dividend increase announcement. Back on May 3rd the Board of Directors at Phillips 66 (PSX) announced an increase to their dividend. The quarterly payout was boosted from $0.63 to $0.70 or 11.1%. Assuming the dividend is maintained at this level for the remainder of 2017 Phillips 66 will have increased their dividend for 6 consecutive years giving them the title of Dividend Challenger. Shares currently yield 3.62% based on the new annualized dividend.
Since I own 8.289 shares of Phillips 66 in my FI Portfolio this raise increased my forward 12-month dividends by $2.32. This is the 7th dividend increase that Phillips 66 has given owners since being spun off of ConocoPhillips (COP) in 2012. Through organic dividend growth alone Phillips 66 has increased my annual dividend payments by 250% cumulatively. According to US Inflation Calculator the cumulative rate of inflation over that same time is just 6.5% so yeah Phillips 66 is definitely increasing my income faster than inflation is eating away at it.
A full screen version of this chart can be found here.
Phillips 66 doesn't have the longest streak although they've done as good of a job as possible. In 2012 Phillips 66 was spun off from ConocoPhillips and Phillips 66 has paid and increased dividends every year since. They've actually given investors 7 dividend increases out of the 20 total dividends they've paid. Even better is that they've been growing the dividend at a healthy clip too with the lowest year over year raise being 11.4%. I think I can live with that.
|Phillips 66 (PSX) Annual Dividend and Rolling Dividend Growth Rates|
A full screen interactive version can be found here.
My forward dividends increased by $2.32 with me doing nothing. That's right, absolutely nothing to contribute to their operations. Based on my portfolio's current yield of 2.90% this raise is like I invested an extra $80 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 20 dividend increases from 18 companies held in my FI Portfolio increasing my forward 12-month dividends by $112.84.
My FI Portfolio's forward-12 month dividends increased to $5,675.76. Including my Loyal3 portfolio's forward dividends of $35.79 brings my total taxable accounts dividends to $5,711.55. My Roth IRA's forward 12-month dividends are at $286.85.
Do you own shares of Philips 66? Are you happy with the dividend growth?
Please share your thoughts below.