Dividend Increase | Archer Daniels Midland (ADM)

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Aflac 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 February 5th the Board of Directors at Archer Daniels Midland (ADM) approved an increase to their quarterly dividend.  The dividend payout was increased from $0.335 to $0.35.  That's a 4.5% increase from the prior payout.  Archer Daniels Midland is a Dividend Champion with 43 consecutive years of dividend increases.  Shares currently yield 3.38% based on the new annualized payout.

The new $0.35 dividend payment will be payable on March 12th to shareholders of record as of February 19th.

Since I now own 25 shares of Archer Daniels Midland in my FI Portfolio this raise increased my forward 12-month dividends by $1.50.  This is the 1st dividend increase I've received from Aflac since initiating a position last month.  The total organic dividend growth obviously comes to 4.5%.  

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

Every year for over 40 years Archer Daniels Midland has been paying out more money to shareholders.  Since Archer Daniels Midland is primarily a commodity based business it should come as no surprise that annual dividend growth is highly variable.  That's why the longer term, 10 year dividend growth rate, is more important for me when looking at a company like ADM.  The rolling 10 year dividend growth rate has been surprisingly strong with every 10 year period starting with 1995-2005 through the period ending 2017 seeing >10% annualized dividend growth.  There's been a slight slow down below 10% for 2018 and assuming no additional increases this year for 2019 as well.  

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.

*2019's dividend assumes the new payout of $0.35 per share is maintained for the rest of 2019.

Wrap Up

This raise increased my forward dividends by $1.50 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 3.04% this raise is like I invested an extra $50 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 6 total increases from 8 of the 53 companies held in my FI Portfolio.  In total my forward 12-month dividends have increased by $55.45.

My FI Portfolio's forward-12 month dividends increased to $6,773.84.  Including my FolioFirst portfolio's forward dividends of $92.09 brings my total taxable accounts dividends to $6,865.93.  My Roth IRA's forward 12-month dividends increased to $414.23.

Do you own shares of Archer Daniels Midland?  Were you satisfied with that 4.5% increase or did it leave you wanting more?

Please share your thoughts below.