One Raise at a Time | Unexpected But Much Appreciated
Who doesn't love surprises? Especially when they're the good kind. The end of January was a bit crazy with a flurry of dividend increases and a return of market volatility so I'm just now getting a chance to write about this excellent increase from one of my favorite holdings.
On January 30th the Board of Directors at Visa (V) announced an increase to their quarterly dividend payout. The dividend was increased from $0.195 per share up to $0.21 per share. That's a solid 7.7% raise. Visa is a Dividend Contender with 10 consecutive years of dividend increases. Shares currently yield 0.72% based on the new annualized payout.
That might seem like a small raise from Visa when increases should be coming in well above 10%; however, keep in mind that this raise was on the heels of the 18.2% increase they gave to investors back in October. Compared to the same payment from 2017 the new dividend is now 27.3% higher.
Since I own 38.33 shares of Visa in my FI Portfolio this raise increased my forward 12-month dividends by $2.30. This is the 6th dividend increase I've received from Visa since initiating a position in August 2013. Cumulatively, the organic dividend growth from Visa has amounted to 154.6% over that time. According to US Inflation Calculator the cumulative rate of inflation over that same time is just 5.8%. I think it's safe to say that Visa is growing my purchasing power each year.
A full screen version of this chart can be found here.
Visa's dividend history is now 10 years old and things are looking fantastic. It really is a thing of beauty. The "worst", if you can even call it that, year over year increase has come in a 17.0%. As such the 3-year and 5-year growth rates are both excellent as well with the lowest being 18.0% and 19.3%, respectively.
*2018's dividend assumes the current quarterly payout of $0.21 per share is maintained for the rest of the year.
This raise increased my forward dividends by $2.30 with me doing nothing. That's right, absolutely nothing to contribute to their operations. Based on my portfolio's current yield of 2.85% 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 2018 I've received 8 dividend increases combining to increase my forward 12-month dividends by $78.13.
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 Visa? Were you excited to see that unexpected raise?
Please share your thoughts below.