One Raise at a Time | Ma Bell Is As Old As I Am

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Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Ma Bell for the 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 Friday of last week the Board of Directors at AT&T (T) approved an increase to their quarterly dividend payment.  To no one's surprise they stuck with the theme of $0.01 per share per quarter pay raises.  The new dividend payout will be $0.50 per share which comes in at a 2.0% increase from the previous payout.  AT&T is a Dividend Champion with 33 years of dividend growth and is a consistently high yielder within my portfolio.  Shares currently yield 5.23% based on the new annualized payout.

Since I own 51.088 shares of AT&T in my FI Portfolio this raise increased my forward 12-month dividends by $2.04.  This is the 7th dividend increase I've received from AT&T since initiating a position back in .  Through organic dividend growth alone AT&T has increased my annual dividend payments over 16% cumulatively.  According to US Inflation Calculator the cumulative rate of inflation over that same time is just 9.7%.  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.

AT&T isn't exactly a fast grower any more and if you buy shares thinking dividend growth will be high you'll be severely disappointed.  However, the small dividend increases are made up for with a dividend yield that is typically north of 5%.  Going forward I wouldn't expect dividend growth to deviate much from the $0.01 per share per quarter annual raises.
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AT&T (T) Annual Dividend and Rolling Dividend Growth Rates
*2018's dividend assumes 4 payments at the new $0.50 quarterly rate.  

A full screen interactive version can be found here.

Wrap Up

My forward dividends increased by $2.04 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 $75 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 45 dividend increases from 38 companies held in my FI Portfolio increasing my forward 12-month dividends by a combined $265.60.

My FI Portfolio's forward-12 month dividends increased to $5,802.37.  Including my FolioFirst portfolio's forward dividends of $75.73 brings my total taxable accounts dividends to $5,878.10.  My Roth IRA's forward 12-month dividends are at $318.35.

Do you own shares of AT&T?  Any concerns with the slow dividend growth or just steady as she goes?

Please share your thoughts below.

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  1. T is one of my larger holdings as well, and even though the dividend growth is slow (~2%), the base dividend is already well over 5%. No complaints there :)

  2. Absolutely correct. Dividend growth investing at work ! I agree with slow dividend growth but I also believe the overall dividend portfolio of any kind for any person at any age, AT&T is must own stock. I own some myself too for the long haul.

    Happy investing.


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