Dividend Increase | V.F. Corporation $VFC #Dividend

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks VF 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 October 26th the Board of Directors at V.F. Corporation (VFC) approved an increase in the quarterly dividend payment.  The dividend was increased from $0.50 to $0.51 which is a paltry 2.0% increase.  Shares currently yield 7.22% based on the new annualized payout.

The new dividend will be payable December 20th to shareholders of record as of December 12th.

Since I own 225.568 shares of V.F. Corporation in my Rollover IRA, this raise increased my forward 12-month dividends by $9.02.  This is the 6th raise that I've received from V. F. Corp since initiating a position in 2016 with total organic dividend growth coming to just 21%.  

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

V.F. Corporation is a Dividend King with 50 consecutive years of dividend growth.  There's a lot to worry about with V.F. Corporation right now especially if the much called for recession occurs further cutting spending by consumers.  However, for now their dividend streak is in tact although dividend growth has been very meager the 3rd straight year of just a $0.01 quarterly increase.

While it appears that V.F. Corporation had a dividend cut back in 2019 that was due to the Kontoor Brands (KTB) spinoff.  Since the combined dividend represented an increase compared to 2018, V.F. Corporation's streak lives on.

Since 1990, V.F. Corporation's year over year dividend growth has ranged from 0.0% to 76.4% with an average of 9.7% but a median of just 5.3%.

There's been 28 rolling 5-year periods over that time with annualized dividend growth coming in between 3.2% to 18.6% with an average of 10.0% and a median of 7.1%.

There's also been 23 rolling 10-year periods with V.F. Corporation's annualized dividend growth spanning from 4.8% to 17.1% with an average of 10.4% and a median of 11.1%.

The 1-, 3-, 5-, and 10-year rolling dividend growth rates for V.F. Corporation since 1990 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.

V.F. Corporation's 3-year average forward dividend yield is 3.08% which corresponds to a share price of $66 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 - $74 and suggests that shares are currently trading well below the lower end of fair value.

Wrap Up

This raise increased my forward dividends by $9.02 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 2.39% this raise is like I invested an extra $378 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 18th dividend increase I've received from the companies in my Rollover IRA increasing my forward 12-month dividends by $362.43 combined.

My FI Portfolio's forward-12 month dividends are $10,960.74  Including my FolioFirst portfolio's forward dividends of $233.29 brings my total taxable accounts dividends to $11,194.03.  My Roth IRA's forward 12-month dividends are $1,059.07.  My Rollover IRA's forward dividends are $4,636.07.  Across all accounts I can expect to receive $16,889.17 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.  V.F. 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 V.F. Corporation?  Do you think this is just some troubled waters they will get through or will they be forced to cut their dividend in time?

Please share your thoughts below.