Dividend Increase | EOG Resources $EOG #Dividend

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks EOG Resources for 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 November 3rd the Board of Directors at EOG Resources (EOG) approved an increase in the quarterly dividend payment.  The dividend was increased from $0.75 to $0.825 which is an excellent 10% increase.  EOG is a Dividend Challenger with 5 consecutive years of dividend growth.  Shares currently yield 2.26% based on the new annualized payout.

The new dividend will be payable January 31st to shareholders of record as of January 17th.

In addition to their increase they also announced yet another special dividend.  This one for $1.50 per share that will be paid December 30th to shareholders of record as of December 15th.  That makes $3.00 in regular dividends plus $5.80 in special dividends during 2022.

Back in August I reviewed my investment in EOG Resources which has been okay, but predictably unpredictable and volatile due to it being a commodity business.

Since I own 8.098 shares of EOG Resources in my FI Portfolio, this raise increased my forward 12-month dividends by $2.43.  This is the 10th raise that I've received from EOG since initiating a position in 2011 with total organic dividend growth coming to 931%!  

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

EOG hasn't exactly been the model of consistency for dividend growth; however, they haven't cut the dividend although there has been pauses in dividend growth.  Despite the pauses and clunky dividend growth EOG has amassed an impressive pace of dividend growth with every rolling 10-year period coming in greater than 10%.

Since 2000 EOG's year over year dividend growth has ranged from 0.0% to 100.0% with an average of 28.6% and a median of 19.0%.

There's been 19 rolling 5-year periods over that time with annualized dividend growth coming in between 9.5% to 59.5% with an average of 26.5% and a median 17.0%.

Over that same period there's been 14 rolling 10-year periods with annualized dividend growth spanning from 12.5% to 34.2% with an average of 24.7% and a median of 26.2%.

The 1-, 3-, 5-, and 10-year rolling dividend growth rates for EOG Resources since 1993 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 3-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.

EOG Resources' 3-year average forward dividend yield is 2.64% which corresponds to a share price of $125 based on the new annualized payout.  

I consider the fair value range based on dividend yield theory to be the 3-year moving average yield +/- 10%.  That gives a fair value range of $114 - $139 and suggests that shares are currently trading above the upper end of fair value.

Wrap Up

This raise increased my forward dividends by $2.43 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 2.62% this raise is like I invested an extra $92 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.

This is the 50th dividend increase I've received from the companies in my FI Portfolio increasing my forward 12-month dividends by $550.53 combined.

My FI Portfolio's forward-12 month dividends are $11,021.99  Including my FolioFirst portfolio's forward dividends of $233.37 brings my total taxable accounts dividends to $11,255.36.  My Roth IRA's forward 12-month dividends are $1,060.22.  My Rollover IRA's forward dividends are $4,658.67.  Across all accounts I can expect to receive $16,974.25 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.  EOG Resources' 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 EOG Resources or other commodity based business?  

Please share your thoughts below.