One Raise at a Time | The Raises Just Keep Coming

Concept of how dividend growth investing works, health care, real estate
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Aflac and Chevron 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.

January turned out to be an incredible month for dividend increase with way more than I expected.  Last year only 3 of my companies announced raises during January yet 2018 is a different story with 7 increases during the month.  That's how to get the year started off right.  I can honestly say that I didn't see this coming.

Aflac Inc. (AFL)

On January 31st the Board of Directors at Aflac (AFL) announced another increase to their quarterly dividend payout and boosting it back in October as well.  The dividend was increased from $0.45 per share up to $0.52 per share.  That's a huge 15.6% raise.  Aflac Company is a Dividend Champion with 35 consecutive years of dividend increases.  Shares currently yield 2.34% based on the new annualized payout.

Since I own 73.411 shares of Aflac in my FI Portfolio this raise increased my forward 12-month dividends by $20.56.  This is the 6th dividend increase I've received from Aflac since initiating a position in early 2013.  Combined organic dividend growth from Aflac has amounted to 48.6% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is just 5.8%.  That's dividend growth investing in a nutshell.  

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

Aflac has been a steady dividend grower throughout the years.  The great thing about the business model is that if they're conservative in their underwriting practices the probabilities will play out that the business will continue to move forward year after year.  

Since 1993 Aflac's smallest annual increase came in 2010 at just 1.79%.  The slowest 3 year dividend growth rate has been 5.07% with 5.36% being the lowest 5 year dividend growth rate.  Out of the rolling 10 year periods from 2003 until 2018 the smallest 10 year dividend growth rate is still a very healthy 8.04%.

*2018's dividend assumes the current quarterly payout of $0.52 per share is maintained for the rest of the year.

Chevron Corporation (CVX)

Also on January 31st Chevron's Board of Directors granted shareholders a dividend increase.  This was a very welcomed sight for Chevron shareholders over the last few years, myself included.  The quarterly dividend payment was increased from $1.08 per share to $1.12.  That's a solid 3.70% increase.  Chevron is a Dividend Champion with 30 consecutive years of dividend increases.  Shares currently yield 3.78% based on the new annualized payout.

Since I own 61.798 shares of Chevron in my FI Portfolio my forward 12-month dividends increased by $9.89.  This is the 3rd dividend increase I've received from Chevron since initiating a position back in May 2013.  Cumulatively, the organic dividend growth rate on those shares has been a solid 12.0%.  Considering that inflation, according to US Inflation Calculator, has been 5.8% over that same time Chevron has still outpaced inflation despite a relatively poor operating environment.

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

For many companies, dividend growth comes in waves with high dividend growth for a few years followed by lower dividend growth for a few years as the business cycle fluctuates.  As such I like to look at rolling dividend growth rates to get a better idea of the dividend growth over longer periods of time.  This helps to smooth out the dividend growth and gives a better idea of what investors could potentially expect going forward across the entirety of the business cycle.

Since Chevron's business is very much tied to the price of the commodity they produce, oil and gas, the business swings are more pronounced depending on the operating environment at the time.  However, throughout it all Chevron has still continued giving investors raises each year.  

Looking at the chart below it's pretty obvious that Chevron's business isn't the steadiest from any given year to the next with dividend growth fluctuating wildly.  This is the perfect example of a company that you want to look at the dividend growth over longer periods of time in order to smooth out the ups and downs of the commodity cycle.  

A full screen version of the above chart can be found here.

*2018's dividend growth assumes the $1.12 per share per quarter payout is maintained throughout the year.
Dividends | Dividend Growth Rates | Financial Independence
Chevron (CVX) Dividend Growth Rates
The above table shows Chevron's historic minimum, maximum and average 1-year, 3-year, 5-year and 10-year dividend growth rates.  As I mentioned above the dividend growth from any given year to the next is a bit of a crapshoot; however, over time Chevron has proven to be a steady and consistent dividend grower with dividend growth over the longer periods around 6-7%.

Wrap Up

These 2 raises increased my forward dividends by $30.44 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.69% this raise is like I invested an extra $1,130 in capital.  Except that I didn't!  Two 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 7 dividend increases combining to increase my forward 12-month dividends by $75.83.  

My FI Portfolio's forward-12 month dividends increased to $5,937.34.  Including my FolioFirst portfolio's forward dividends of $77.19 brings my total taxable accounts dividends to $6,014.53.  My Roth IRA's forward 12-month dividends are at $336.46.

Do you own shares of either of these Dividend Champions?  Were you surprised by the somewhat unexpected increases?

Please share your thoughts below.


  1. Nice recap. I'm only long T at the moment as our only individual holding. We're looking to expand individual holdings in our taxable accounts in the coming month.

    Good points captured here. Thanks for sharing.


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