One Raise at a Time | 55 Years In The Making

Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Coca-Cola 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.

On February 15th the Board of Directors at The Coca-Cola Company (KO) announced another increase to their quarterly dividend payout.  The dividend was increased from $0.37 per share up to $0.39 per share.  That's a solid 5.4% raise.  Coca-Cola is a Dividend Champion with 55 consecutive years of dividend increases.  Shares currently yield 3.47% based on the new annualized payout.

Since I own 161.817 shares of Coca-Cola in my FI Portfolio this raise increased my forward 12-month dividends by $13.08.  This is the 7th dividend increase I've received from Coca-Cola since initiating a position in September 2011.  Cumulatively, the organic dividend growth from Coca-Cola has totaled to 66.0% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is just 10.2%.  

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

Coca-Cola is one of the core stocks for many dividend growth portfolios and for good reason: consistency.  The days of 10%+ annual dividend growth are likely gone; however, a consistent 4-8% increase every year will still get the job done.

Even though Coca-Cola's dividend growth has slowed there's still plenty for investors to celebrate.  Unfortunately though, barring a change in the growth story for Coca-Cola, dividend might very well remain muted going forward.  Since 2000 the lowest 1-year, 3-year, 5-year and 10-year dividend growth rates have all come during 2018 with 5.41%, 5.73%, 6.85% and 7.46%, respectively.

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

*2018's dividend assumes the new quarterly payout of $0.39 per share is maintained for the rest of the year.

Wrap Up

This raise increased my forward dividends by $13.08 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.77% this raise is like I invested an extra $472 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 2018 I've received 11 dividend increases combining to increase my forward 12-month dividends by $132.90.  

My FI Portfolio's forward-12 month dividends increased to $6,016.08.  Including my FolioFirst portfolio's forward dividends of $78.08 brings my total taxable accounts dividends to $6,094.16.  My Roth IRA's forward 12-month dividends remain at $336.46.

Do you own shares of Coca-Cola?  Were you happy with the steady increase or were you expecting more?

Please share your thoughts below.