Dividend Increase | BlackRock (BLK)
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| Getting a pay raise while sitting on the couch? Sign me up! Thanks BlackRock 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 21st the Board of Directors at BlackRock (BLK) approved an increase in the quarterly dividend payment from $3.63 up to $4.13. BlackRock is a Dividend Contender with 12 consecutive years of dividend growth. Shares currently yield 2.23% based on the new annualized payout.
The new dividend will be payable Mach 23rd to shareholders of record as of March 5th.
Since I own just 0.978 shares of BlackRock in my FI Portfolio, this raise increased my forward 12-month dividends by $1.96. This is the 1st dividend increase I've received from BlackRock since initiating a position in September 2020. The share price rallied sharply and it became really difficult for me to add in significant amounts due to my lizard brain and anchoring bias. It's a constant struggle.
A full screen version of this chart can be found here.
BlackRock initiated a dividend in 2003 and grew the payout every year up until 2009 when they failed to raise the dividend. Considering their business and what was going on in the world at the time, I think that's excusable. BlackRock resumed annual dividend increases in 2010.
From 2003 through the estimated 2021 payout, year over year dividend growth has ranged from 0.0% to 59.5% with an average of 19.1% and a median of 14.3%.
Over that same period there's been 14 rolling 5-year time periods with BlackRock's annualized dividend growth ranging from 10.7% to 31.3% with an average of 17.9% and a median of 16.7%.
There's also been 9 rolling 10-year periods with annualized dividend growth ranging from 11.6% to 23.7% with an average of 17.4% and a median of 15.5%.
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.
BlackRock's 5-year average forward dividend yield is 2.60% which corresponds to a share price of $635 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 $578 - $706 and suggests that Blackrock shares are trading above the upper end of fair value.
Wrap Up
This raise increased my forward dividends by $1.96 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 2.43% this raise is like I invested an extra $80 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 2 raises from the companies in my FI Portfolio increasing my forward-12 month dividends by $2.17.
My FI Portfolio's forward-12 month dividends are $7,705.51 Including my FolioFirst portfolio's forward dividends of $106.95 brings my total taxable accounts dividends to $7,812.46. My Roth IRA's forward 12-month dividends are $681.04. My Rollover IRA's forward dividends are $3,353.77. Across all accounts I can expect to receive $11,847.27 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. BlackRock'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 BlackRock? What kind of long term dividend growth do you think BlackRock can produce?
Please share your thoughts below.
The 1-, 3-, 5- and 10-year rolling dividend growth rates since 2003 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.
BlackRock's 5-year average forward dividend yield is 2.60% which corresponds to a share price of $635 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 $578 - $706 and suggests that Blackrock shares are trading above the upper end of fair value.
Wrap Up
This raise increased my forward dividends by $1.96 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 2.43% this raise is like I invested an extra $80 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 2 raises from the companies in my FI Portfolio increasing my forward-12 month dividends by $2.17.
My FI Portfolio's forward-12 month dividends are $7,705.51 Including my FolioFirst portfolio's forward dividends of $106.95 brings my total taxable accounts dividends to $7,812.46. My Roth IRA's forward 12-month dividends are $681.04. My Rollover IRA's forward dividends are $3,353.77. Across all accounts I can expect to receive $11,847.27 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. BlackRock'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 BlackRock? What kind of long term dividend growth do you think BlackRock can produce?
Please share your thoughts below.
Congrats on the sweet raise. This is the type of dividend stock dg investors should be buying. Their double digit annual growth is so dang consistent and here they are dropping another 14% raise.
ReplyDeleteRegards,
SD Growth