Dividend Increase | Ross Stores (ROST)

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Ross for the 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 March 5th the Board of Directors at Ross Stores (ROST) approved an increase to their dividend payment.  The dividend payout was increased from $0.225 to $0.255.  That's a huge 13.3% increase from the prior payout.  Ross Stores is a Dividend Champion with 25 consecutive years of dividend increases.  Shares currently yield 1.08% based on the new annualized payout for U.S. owners.  

The new $0.255 dividend will be payable on March 29th to shareholders of record as of March 18th.

Since I own 56.131 shares of Ross in my FI Portfolio this raise increased my forward 12-month dividends by $6.74.  This is the 4th dividend increase I've received from Ross since initiating a position in May 2015.  The total organic dividend growth since I initiated a position has been 117.0%.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 6.2%.  

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

Ross' history of dividend growth is truly impressive.  Since initiating a dividend in 1994 the "worst" year over year growth rate has been 11.7%.  A 10%+ raise in a bad year is definitely something I can get behind and one of the big reasons that I invested in Ross back in 2015.  You can read my full analysis of Ross Stores over on Seeking Alpha, but at this it seems fairly valued so better opportunities might be in store in the future.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1994 can be found in the following chart.  

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

*2019's growth rate assumes the new $0.255 dividend is maintained for the rest of 2019

Wrap Up

This raise increased my forward dividends by $6.74 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.98% this raise is like I invested an extra $225 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 15 total increases from 15 of the 54 companies held in my FI Portfolio.  In total my forward 12-month dividends have increased by $89.97.

My FI Portfolio's forward-12 month dividends increased to $6,836.70.  Including my FolioFirst portfolio's forward dividends of $97.80 brings my total taxable accounts dividends to $6,934.50.  My Roth IRA's forward 12-month dividends remain at $414.72.

Do you own shares of Ross Stores?  Do you think they can keep up their impressive pace of dividend growth?

Please share your thoughts below.