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 ADM 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 January 26th the Board of Directors at Archer Daniels Midland (ADM) approved an increase in the quarterly dividend payment from $0.36 up to $0.37.  Archer Daniels Midland is a Dividend Champion with 45 consecutive years of dividend growth.  Shares currently yield % based on the new annualized payout.

The new dividend will be payable March 2nd to shareholders of record as of February 9th.  

Since I own 73.759 shares of Archer Daniels Midland in my FI Portfolio, this raise increased my forward 12-month dividends by $2.95.  This is the 3rd dividend increase I've received from Archer Daniels Midland since initiating a position in February 2019.  Total organic dividend growth over that time is 10.5%.  

I also own 108.383 shares in my Rollover IRA and this raise increased my forward 12-month dividends for that portfolio by $4.34.

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

Dating back to 1995 there's been 27 1-year periods with year over year dividend growth ranging from 2.8% to 66.8% with an average of 11.9% and a median of 7.4%.

Over that same time there's been 22 rolling 5-year periods with annualized dividend growth ranging from 4.3% to 16.7% with an average of 10.9% and a median of 11.7%.

There's also been 17 rolling 10-year periods since 1995 with annualized dividend growth ranging from 8.5% to 14.1% with an average of 11.5% and a median of 12.1%.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1995 can be found in the following chart.  

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

For dividend yield theory I consider the fair value range to be the forward dividend yield +/- 10% compared to the 5 year moving average, the under/over value area to be to between 10%-20% deviation from the average and significant over/under value are greater than a 20% deviation from the average.

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

Archer Daniels Midland's 5-year average forward dividend yield is 3.12% which corresponds to a share price of $47.44 based on the new annualized payout.  

I consider the fair value range based on dividend yield theory to be the 5-year moving average yield +/- 10%.  That gives a fair value range of $43 - $53 and suggests that Archer Daniels Midland shares are trading at the upper end of fair value.

Wrap Up

This raise increased my forward dividends by $2.95 with zero effort on my part.  That's right, absolutely nothing to contribute to their operations.  Based on my FI Portfolio's current yield of 2.44% this raise is like I invested an extra $121 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.

I've now received 3 raises from the companies in my FI Portfolio increasing my forward-12 month dividends by $5.12.

My FI Portfolio's forward-12 month dividends are $7,708.08  Including my FolioFirst portfolio's forward dividends of $106.94 brings my total taxable accounts dividends to $7,815.02.  My Roth IRA's forward 12-month dividends are $682.48.  My Rollover IRA's forward dividends are $3,358.11.  Across all accounts I can expect to receive $11,855.61 in dividends over the next year.

I've also started compiling dividend data on many of the companies that I own or would like to own.  Archer Daniels Midland's can be found here which includes the dividend history (as far back as I can find without spending hours hunting it down), rolling dividend growth rates and dividend yield theory.  To see other companies that I've already gathered the data on you can check out the Dividend Companies page.  Check it out and let me know what you think.

Do you own shares of Archer Daniels Midland?  Do you think they can return to at least mid-to-upper single digit dividend growth over the long haul?  

Please share your thoughts below.


  1. Hi PIP,
    could you share where you get the yield charts from, particularly for this time range or are you compiling them yourself'
    Looking forward to your response.

    1. I compile them myself using the historic dividends and closing trading prices. It's a bit of a headache to keep up with but I think it's a good way to get an idea of when things are outside of the norm. I'm working on ways to try and automate is some, but I just haven't had the time to devote to it.

      All the best.


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