One Raise At A Time | Let The Raises Resume

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

Earlier this month the Board of Directors at BP plc (BP) announced an increase to their dividend payment.  The quarterly dividend was raised from $0.595 up to $0.61 per share.  That's a decent 2.52% increase.  This is BP's first dividend increase since December 2014.  Shares currently yield 5.76% based on the new annualized payout.

The new dividend will be paid out on September 21, 2018 to shareholders of record as of August 10th.  

Since I own 96.563 shares of BP in my FI Portfolio this raise increased my forward 12-month dividends by $5.79.  This is the 5th dividend increase I've received from BP since initiating a position in May 2013.  

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

BP got into a serious cash crunch during the last 2 oil busts, ~2010 and 2014, which were a big negative to their dividend growth.  The 2010 bust in particular saw BP have to slash its dividend in half after growing it since at least 1992.  BP then resumed growing their dividend until the bust that started in late 2014/early 2015.  Since then the dividend was maintained, but not increased, for 13 straight payments until this raise was announced.  I hope this just the start of a hefty streak of increases; however, being a commodity producer, and thus having no pricing power, only time will tell.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1992 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 $0.61 per share is maintained for the rest of the year.

Wrap Up

This raise increased my forward dividends by $5.79 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.90% this raise is like I invested an extra $200 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 40 dividend increases from 38 of the companies in my FI Portfolio combining to increase my forward 12-month dividends by $352.73.  

My FI Portfolio's forward-12 month dividends increased to $6,413.75.  Including my FolioFirst portfolio's forward dividends of $88.41 brings my total taxable accounts dividends to $6,502.16.  My Roth IRA's forward 12-month dividends are at $371.75.

Do you own BP plc in your portfolio?  What about other commodity specific companies?

Please share your thoughts below.


  1. JC,

    Don't own BP but do hold shares in other Energy related companies (XOM, CVX, TOT, and ENB); XOM has certainly not been a winner.

    I know we can't always pick winners but when I look at BP's historical performance over the last 10 years it is tough for me to get excited about it. In fact, I see that BP's quarterly dividend (I know that is not the be all and end all) has been stagnant at $0.60 since late 2014.

    Do you hold BP in a tax advantaged account? If not, what withholding tax do you incur?



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