One Raise At A Time | Another Stellar Increase

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Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Phillips 66 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 May 9th the Board of Directors at Phillips 66 (PSX) announced another stellar increase for shareholders.  The dividend was increased from $0.70 up to $0.80.  That's a huge 14.3% increase.  Phillips 66 is a Dividend Challenger with 6 consecutive years of dividend increases.  Shares currently yield 2.71% based on the new annualized payout.

Since I own 8.289 shares of Phillips 66 in my FI Portfolio this raise increased my forward 12-month dividends by $3.32.  This is the 9th dividend increase I've received from Phillips 66 since it was spun off from Conoco Phillips in 2012.  Cumulatively, the organic dividend growth has totaled a whopping 300% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 9.1%.

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

What Phillips 66 lacks in length of dividend growth they've more than made up for it with the pace of it.  Since they initiated a dividend in 2012 it's grown above 10% per year every year.  While the payout ratio has climbed it's still at a very manageable level around 40% based on the average analyst estimate of $7.21 of earnings per share for 2018.

The 1-, 3- and 5-year rolling dividend growth rates since 2013 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 $0.80 per share is maintained for the rest of the year.

Wrap Up

This raise increased my forward dividends by $3.32 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.92% this raise is like I invested an extra $113 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 25 dividend increases from 26 of the companies in my FI Portfolio combining to increase my forward 12-month dividends by $218.36.  

My FI Portfolio's forward-12 month dividends increased to $6,197.03.  Including my FolioFirst portfolio's forward dividends of $82.08 brings my total taxable accounts dividends to $6,279.11.  My Roth IRA's forward 12-month dividends are at $338.52.

Do you own Phillips 66 in your own portfolio?  Do you think they can keep up the 10%+ annual raises?

Please share your thoughts below.


  1. I do not own PSX, but I'm always very excited to read about a dividend increase! Congrats on receiving the nice invlux of capital.


    1. Bert,

      I wish my position was bigger, but I just never really built it up after receiving the shares in spinoff. They've dividend increases have been fantastic though!

      All the best.

  2. That's a sweet raise, JC. Way to do nothing and get a big raise! I don't own PSX, but rather XOM. XOM had a dividend raise recently, but only about half that percentage. Congrats on continuing to build the forward 12-month dividends.

    1. ED,

      Got to love a 14% raise! I own XOM too and while the raise was much smaller than PSX it's right around where I expect them to be over the long term so there's not complaints from me.

      Thanks for stopping by!


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