Dividend Increase | Exxon Mobil

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Realty Income for yet 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 April 24th the Board of Directors at Exxon Mobil (XOM) approved of an increase to their quarterly dividend payment.  The dividend was increased from $0.82 up to $0.87.  That works out to a 6.1% raise from the prior dividend payment.  Exxon Mobil is a Dividend Champion with 36 consecutive years of dividend increases.  Shares currently yield 4.37% on a forward basis.

Since I own 73.319 shares of Exxon Mobil in my FI Portfolio this raise increased my forward 12-month dividends by $14.66.  This is the 6th dividend increase I've received from Exxon Mobil since initiating a position in 2013.  Cumulatively, the organic dividend growth has totaled a 38.1% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is just 9.1%.  

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

Exxon Mobil's dividend growth history is pristine for a company that deals with commodities.  With little control over the pricing of their end products its quite impressive to see a 30+ year streak of dividend growth.  For companies like Exxon Mobil I like to look at dividend growth over longer periods of time, such as the 5 year and 10 year, to get a better idea of what could possibly be in store going forward.  Exxon Mobil doesn't disappoint here with at 10 year growth rate routinely between 5-10%.

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 dividend assumes the new quarterly payout of $0.87 per share is maintained for the rest of 2019.

Wrap Up

This raise increased my forward dividends by $14.66 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.91% this raise is like I invested an extra $504 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 18 total increases from 17 of the 54 companies in my FI Portfolio.  Combined those increases have raised my forward 12-month dividends by $113.91.

My FI Portfolio's forward-12 month dividends increased to $6,911.85.  Including my FolioFirst portfolio's forward dividends of $97.69 brings my total taxable accounts dividends to $7,009.54.  My Roth IRA's forward 12-month dividends remain at $462.84.

Do you own shares of Exxon Mobil?  Do you think they can continue to deliver 5-10% dividend growth over the long term?

Please share your thoughts below.