Dividend Increase | Air Products & Chemicals (APD)

Getting a pay raise while sitting on the couch?  Sign me up!  Thanks APD for another dividend increase!

There's an old Chinese proverb that says "the best time to plant a tree was 20 years ago, the next best time is now".  The reason for this is that it takes time for a tree to grow and prosper and for you to start reaping its benefits.  Dividend growth investing is much the same way.  It takes consistent saving and investing as well as time and patience to let the power of dividend growth take hold.

That's why one of my favorite things is when one of the companies I own decides to pay out more in dividends.  You mean I get a pay raise just for owning a small piece of a company?  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.  

On January 24th the Board of Directors at Air Products & Chemicals (APD) approved an increase to their quarterly dividend.  The dividend payout was increased from $1.10 to $1.16.  That's a 5.45% increase from the prior payout.  Air Products is a Dividend Champion with 36 consecutive years of dividend increases.  Shares currently yield 2.88% based on the new annualized payout.

The $1.16 dividend payment will be payable on May 13 to shareholders of record as of March 29.

Since I own 18.481 shares of Air Products in my FI Portfolio this raise increased my forward 12-month dividends by $4.44.  This is the 6th dividend increase I've received from Air Products since initiating a position in April 2013.  Cumulatively, the organic dividend growth from APD has totaled a whopping 63% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 7.8%.  

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

For a materials/commodity based company Air Products' dividend growth has been relatively consistent from year to year.  Over the last 20 years annual dividend growth has ranged from 5.1% to 20.2%.  I prefer to look at dividend growth over longer periods of time since it smooths out the ups and downs of the business cycle.  Air Products shines here as well with the 10 year rolling dividend growth rates ranging from 7.1% to 12.2%.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1981 can be found in the following chart.  

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

*2019's dividend assumes the new payout of $1.16 per share is maintained for the rest of 2019.

Wrap Up

This raise increased my forward dividends by $4.44 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 3.05% this raise is like I invested an extra $145 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 2019 I've received 3 total increases from 3 of the 51 companies held in my FI Portfolio.  In total my forward 12-month dividends have increased by $14.25.

My FI Portfolio's forward-12 month dividends increased to $6,584.82.  Including my FolioFirst portfolio's forward dividends of $92.14 brings my total taxable accounts dividends to $6,676.96.  My Roth IRA's forward 12-month dividends increased to $413.64.

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