Dividend Increase | Accenture plc (ACN)

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Accenture 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 September 23rd the Board of Directors at Accenture (ACN) approved an increase in the quarterly dividend payment.  The dividend was increased from $0.88 to $0.97 which is an excellent 10.2% increase.  Accenture is a Dividend Contender with 17 consecutive years of dividend growth.  Shares currently yield 1.16% based on the new annualized payout.

The new dividend will be payable November 15th to shareholders of record as of October 14th.

Accenture is a phenomenal company and one that I took way too long to add to my portfolio because it was chronically "overvalued".  Even with the recent increase shares still appear quite expensive and I would feel much more comfortable purchasing shares below $290.  You can check out my recent analysis on Accenture over at Seeking Alpha.

Since I own 9.889 shares of Accenture in my FI Portfolio, this raise increased my forward 12-month dividends by $3.56.  This is the first of what I expect to be many dividend increases I've received from Accenture after initiating a position last December.

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

While it looks like Accenture has some dividend cuts in its past that's actually just related to them swapping from annual payouts to semi-annual and then to quarterly payouts.  Through the financial crisis, as well as Covid, Accenture has been giving out ample dividend raises year after year.  

Since 2006 there's been 17 rolling 1-year periods with Accenture's year over year dividend growth ranging from 7.8% to 50.0% with an average of 18.0% and a median of 12.5%.  

There's been 12 rolling 5-year periods over that time with annualized dividend growth ranging between 9.4% to 31.0% with an average of 18.3% and a median of 16.0%.

There's also been 7 rolling 10-year periods with Accenture's annualized dividend growth rate ranging from 11.1% to 22.1% with an average of 17.8% and a median of 19.3%.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 2006 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.

Accenture's 5-year average forward dividend yield is 1.66% which corresponds to a share price of $234 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 $212 - $259 and suggests that shares are trading well above the fair value range.

Wrap Up

This raise increased my forward dividends by $3.56 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 2.29% this raise is like I invested an extra $155 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 40 raises from the companies in my FI Portfolio increasing my forward-12 month dividends by $532.94.

My FI Portfolio's forward-12 month dividends are $8,777.10  Including my FolioFirst portfolio's forward dividends of $178.53 brings my total taxable accounts dividends to $8,955.63.  My Roth IRA's forward 12-month dividends are $878.47.  My Rollover IRA's forward dividends are $3,933.33.  Across all accounts I can expect to receive $13,767.43 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.  Accenture'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 Accenture?  How long do you think they can keep up >10% annual dividend growth?  

Please share your thoughts below.


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