Dividend Increase | Service Corporation $SCI #Dividend

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Service Corporation 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 2nd the Board of Directors at Service Corporation International (SCI) approved an increase in the quarterly dividend payment.  The dividend was increased from $0.25 to $0.27 which is a solid 8.0% increase.  Shares currently yield 1.55% based on the new annualized payout.

The new dividend will be payable December 30th to shareholders of record as of December 15th.

This raise actually looks even better than the strong 8.0% increase that it was.  This was Service Corporation's 2nd increase after raising it from $0.23 to $0.25, another 8.7% raise, back in February.  Compared to the December 2021 payment this raise is a very impressive 17.4% increase.

Since I own 35 shares of Service Corporation in my Rollover IRA, this raise increased my forward 12-month dividends by $2.80.  This is the 3rd raise that I've received from Service Corporation since initiating a position in early 2021 with total organic dividend growth coming to 29%.  

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

Service Corporation is a Dividend Contender with 12 consecutive years of dividend growth.  Their dividend history got off to an inauspicious start with a freeze in 2009 and 2010; however, since then dividend growth has come every year and at a pretty furious pace.

Since 2007 Service Corporation's year over year dividend growth has ranged from 0.0% to 33.3% with an average of 15.7% and a median of 15.9%.

There's been 11 rolling 5-year periods over that time and even with the pause in raises annualized dividend growth is still impressive.  Annualized dividend growth has come in between 11.0% to 22.4% with an average and median of 16.2%.

Over that time there's also been 6 rolling 10-year periods with annualized dividend growth spanning from 15.6% to 17.2% with an average of 16.5% and a median of 16.6%.

The 1-, 3-, 5-, and 10-year rolling dividend growth rates for Service Corporation since 2007 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.

Service Corporation's 3-year average forward dividend yield is 1.61% which corresponds to a share price of $67 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 $60 - $73 and suggests that shares are currently trading within the fair value range.

Wrap Up

This raise increased my forward dividends by $2.80 with zero effort on my part.  That's right, absolutely nothing to contribute to their operations.  Based on my Rollover IRA's current yield of 2.43% this raise is like I invested an extra $115 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 20th dividend increase I've received from the companies in my Rollover IRA increasing my forward 12-month dividends by $367.55 combined.

My FI Portfolio's forward-12 month dividends are $11,018.00  Including my FolioFirst portfolio's forward dividends of $233.34 brings my total taxable accounts dividends to $11,251.34.  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 $16,970.23 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.  Service Corporation'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 Service Corporation?  Do you think they can maintain their impressive pace of dividend growth?

Please share your thoughts below.