Dividend Increase | The Coca-Cola Company (KO)

Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Coca-Cola 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 21st the Board of Directors at The Coca-Cola Company (KO) approved another increase to their dividend payment.  The dividend payout was increased from $0.39 to $0.40.  That's a 2.6% increase from the prior payout.  Coca-Cola is a Dividend Champion with 57 consecutive years of dividend increases.  Shares currently yield 3.56% based on the new annualized payout.  

The new $0.40 dividend will be payable on April 1st to shareholders of record as of March 15th.

Since I own 163.541 shares of Coca-Cola in my FI Portfolio this raise increased my forward 12-month dividends by $6.54.  This is the 8th dividend increase I've received from Coca-Cola since initiating a position in September 2011.  The total organic dividend growth since I initiated a position has been 70.2%.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 11.9%.  

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

Coca-Cola has been one of the quintessential dividend growth investments over the last 50 years.  They experienced tremendous growth as they expanded their business to just about every corner of the world.  However, growth has been much harder to come by recently and the dividend growth shows that with a small 2.6% raise for 2019.  Coca-Cola has been hurt by a number of issues both within and outside of their control that's pushed the payout ratios up leaving less wiggle room for their dividend.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1970 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 $6.54 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.97% this raise is like I invested an extra $220 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 11 total increases from 11 of the 52 companies held in my FI Portfolio.  In total my forward 12-month dividends have increased by $71.62.

My FI Portfolio's forward-12 month dividends increased to $6,791.40.  Including my FolioFirst portfolio's forward dividends of $92.55 brings my total taxable accounts dividends to $6,883.95.  My Roth IRA's forward 12-month dividends remain at $414.23.

Do you own shares of Coca-Cola?  Do you think they will be able to return to at least mid-single digit dividend growth or are we stuck in 2-4% purgatory?

Please share your thoughts below.