One Raise At A Time | Thanks Big Blue

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Getting a pay raise while sitting on the couch?  Sign me up!  Thanks IBM 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 April 24th the Board of Directors at IBM (IBM) announced a dividend increase for shareholders.  The dividend was increased from $1.50 up to $1.57.  That's an decent increase of 4.67%.  IBM is a Dividend Contender with 22 consecutive years of dividend increases.  Shares currently yield 4.33% based on the new annualized payout.

Since I own 30.22 shares of IBM in my FI Portfolio this raise increased my forward 12-month dividends by $8.46.  This is the 5th dividend increase I've received from IBM since initiating a position in 2013.  Cumulatively, the organic dividend growth has totaled a whopping 65.3% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 7.1%.

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

IBM had been a truly phenomenal dividend growth investment with annual dividend growth well above 10% per year.  However, recently the dividend growth has started to slow as the business has fallen on harder times while trying to transition their business model.  

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1993 can be found in the following chart.  

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

*2018's dividend assumes the new quarterly payout of $1.57 per share is maintained for the rest of the year.

Wrap Up

This raise increased my forward dividends by $8.46 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.98% this raise is like I invested an extra $284 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 22 dividend increases from 21 of the companies in my FI Portfolio combining to increase my forward 12-month dividends by $181.97.  

My FI Portfolio's forward-12 month dividends increased to $6,128.62.  Including my FolioFirst portfolio's forward dividends of $79.16 brings my total taxable accounts dividends to $6,207.78.  My Roth IRA's forward 12-month dividends remain at $337.40.

I still expect at least 2 more increases to be announced later this week with the possibility of a couple more.  So far April has been a wonderful month for dividend increases.

Do you own IBM in your own dividend growth portfolio?  Do you think they will eventually turn the company around or just have a "death by a thousand cuts"?

Please share your thoughts below.


  1. Being an owner of IBM JC, I was hoping for a better increase given the modest payout ratio and recent revenue growth turnaround. That said, I will be patient and hold.

    I did recently enjoy a 14% dividend increase from BBT. That's the kind of increase that gets me excited.


  2. I don't own any ibm but making modest increases could be smart from the management until they get the transition done.

  3. That's a very impressive, consistent dividend yield increase your chart highlights. Not knowing much about IBM, I'm surprised the stock price has been languishing so much over the past few years with that performance - the market must be expecting any dividend increases to be minimal over the coming years?


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