One Raise at a Time | Retail & Real Estate The Perfect Christmas Combo

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Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Realty Income for yet another 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.
Earlier this month the Board of Directors at Realty Income (O) approved another increase to their monthly dividend payment.  The dividend was increased from $0.2120 per share per to $0.2125.  That works out to a 0.24% increase.  Realty Income is a Dividend Contender with 24 consecutive years of dividend increase.  Shares currently yield 4.57% based on the new annualized payout.

Realty Income is a different breed of dividend growth stock.  For starters they pay monthly dividends rather than the more typical quarterly payout.  However, another thing that distinguishes them is that they typically give investors multiple smaller raises throughout the year rather than a larger increase just once per year.  This latest raise was just 0.24% higher compared to the previous payout; however, compared to the year ago payment it's 4.94% higher.  For a company that typically yields north of 4.5% that's perfect for me.

Since I own 95.475 shares of Realty Income in my FI Portfolio this raise increased my forward 12-month dividends by $0.57.  This is the 22nd dividend increase I've received from Realty Income since initiating a position in July 2013.  Cumulatively since I first bought shares of Realty Income my dividends have increased by 17.0% through organic dividend growth alone.  According to US Inflation Calculator the cumulative rate of inflation over that same time is just 5.9%.  That's dividend growth investing in a nutshell.  

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

I like to examine the dividend growth rates that a company has doled out over time in order to see whether dividend growth is holding steady, increasing or decreasing.  Looking at this gives you an idea of the possible future direction of dividend growth.

Realty Income is one of the premier dividend growth companies out there.  They have paid and raised dividends every year since becoming a publicly traded company in 1994.  Dividend growth might fluctuate from year to year; however, over time it should settle down around the 4-5% per year level.  Considering the shares typically trade at an initial yield of 4-5% that's solidy, steady eddy performance that is hard to overlook.
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Realty Income (O) Annual Dividend and Rolling Dividend Growth Rates
A full screen interactive version can be found here.

Wrap Up

My forward dividends increased by $0.57 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.71% this raise is like I invested an extra $21 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 47 dividend increases from 39 companies held in my FI Portfolio increasing my forward 12-month dividends by a combined $267.57.

My FI Portfolio's forward-12 month dividends increased to $5,830.73.  Including my FolioFirst portfolio's forward dividends of $76.78 brings my total taxable accounts dividends to $5,907.51.  My Roth IRA's forward 12-month dividends are at $318.35.

Do you own shares of Realty Income?  

Please share your thoughts below.

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  1. I don't own shares of O but I do have them via my index funds. I do own a few companies that raise their dividends yearly and it's pretty great to see those dividends increase without doing anything!

    1. TITM,

      What I really like about O is that they give several raises throughout the year. Yeah they're small raises each time, but it's fun to see 3-5 increases from just one company.

      All the best.

  2. I do own shares of O. It's provided a terrific return for me. I really like the rolling dividend growth rate chart you provided... keep them coming.

    1. ED,

      O has treated me really well, although Mr. Market got a little exuberant about the shares back when they were around $70. In hindsight I should have sold and bought back lower, of course if I knew that I probably wouldn't be writing and I wouldn't need to invest very long or with much capital either. Ha!

      I really like to rolling dividend growth rate charts because 1 it helps to smooth things out by being able to see how the 1, 3, 5 and 10 year growth rates compare but also because it let's you see the trends.

      All the best.

  3. I own share of O and love the company. Quite frankly, I should own more shares as I receive about $9 per month from the company. I love their diversification and steady approach to increasing their dividend. It has been slow, steady, and consistent of late. It is also a great way for some exposure to commercial real estate without owning an individual property.

    Cheers to owning O!

    1. Bert,

      O is a great company with top notch management and their commitment to shareholders is awesome. Slow and steady, especially combined with a yield that's typically 5%+ is a good combination over time.

      All the best.

  4. Where do you find out about dividend increases?

    1. Evan,

      In my portfolio tracking spreadsheet I have notes on when the last increase was and since most companies announce on the same schedule from year to year I just start checking whenever it gets to be that time for each of the holdings.

      Seeking Alpha also has a way for you to sign up for dividend announcement notifications which is a nice feature.

      This site also lists the companies that announce dividends each day. The link apparently references back to 2013 though because I guess I copied the link on that day. But you should be able to search for today although I want to say they might be a day behind each day. So it would only be good through 1/2/18 as of now.

      All the best.

    2. Evan,

      Here's a link for the most recent date.

      Hope that helps.


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