One Raise at a Time | I'm Lovin' It

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

Last Thursday the Board of Directors at McDonald's Corporation (MCD) announced another increase to their dividend.  The dividend was increased from $1.01 per share up to $1.16 per share.  That works out to a 14.9% raise.  McDonald's is a Dividend Champion with 42 consecutive years of dividend increases.  Shares currently yield 2.78% based on the new annualized payout.

Since I own 84.906 shares of McDonald's in my FI Portfolio this raise increased my forward 12-month dividends by $50.94.  This is the 7th dividend increase I've received from McDonald's since initiating a position in June 2012.  Cumulatively, the organic dividend growth from McDonald's has totaled a whopping 65.7% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 9.8%.  

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

McDonald's dividend growth history has been quite impressive.  Every year since 1976 dividend raises have come.  That's nearly half a century.  McDonald's, like any company, has gone through periods of slower growth, but thus far has always found a way to gain traction.  

What's really impressive is that despite having periods of slow dividend growth, recently from 2014-2016, the 10 year growth rates are still fantastic.  In fact the "worst" 10 year annualized growth rate over McDonald's dividend history 9.13% and by the end of 2018 the 10 year annualized growth rate will be 9.94%.  

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1976 can be found in the following chart.  

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

Wrap Up

This raise increased my forward dividends by $50.94 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 $1,788 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.

So far in 2018 I've received 47 dividend increases from 42 of the companies in my FI Portfolio combining to increase my forward 12-month dividends by $450.77.  

My FI Portfolio's forward-12 month dividends increased to $6,639.27.  Including my FolioFirst portfolio's forward dividends of $91.15 brings my total taxable accounts dividends to $6,730.42.  My Roth IRA's forward 12-month dividends remain at $395.42.

Do you own shares of McDonald's?

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