Dividend Increase | CubeSmart $CUBE #Dividend

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks CubeSmart 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 December 7th the Board of Directors at CubeSmart (CUBE) approved an increase in the quarterly dividend payment.  The dividend was increased from $0.43 to $0.49 which is an excellent 14.0%  increase.  CubeSmart is a Dividend Contender with 12 consecutive years of dividend growth.  Shares currently yield 4.69% based on the new annualized payout.

The new dividend will be payable January 17th to shareholders of record as of January 3rd.

Since I own 78.348 shares of CubeSmart in my FI Portfolio, this raise increased my forward 12-month dividends by $18.80.  This is the 1st raise that I've received from Cubesmart since initiating a position in late 2021.

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

CubeSmart might not be the prototypical dividend growth stock as they did have to cut their dividend in both 2008 and then again in 2009.  Dividend growth resumed in 2011 and has been steady ever since with their streak now up to 12 consecutive years.

During their streak, CubeSmart's year over year dividend growth has spanned from 3.0% to 37.5% with an average of 18.1% and a median of 16.2%.

Over that time there's been 10 rolling 3-year periods with annualized dividend growth ranging from 4.3% to 27.6% with an average of 17.5% and a median of 19.0%.

Additionally, there's been 8 rolling 5-year periods with CubeSmart's annualized dividend growth coming in between 9.8% to 27.5% with an average of 17.5% and a median of 17.7%.

The 1-, 3-, 5-, and 10-year rolling dividend growth rates for CubeSmart since 2005 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.

CubeSmart's 5-year average forward dividend yield is 3.90% which corresponds to a share price of $50 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 $45 - $56 and suggests that shares are currently trading below fair value.

Wrap Up

This raise increased my forward dividends by $18.80 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 $717 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 58th dividend increase I've received from the companies in my FI Portfolio increasing my forward 12-month dividends by $626.85 combined.

My FI Portfolio's forward-12 month dividends are $11,164.10  Including my FolioFirst portfolio's forward dividends of $234.39 brings my total taxable accounts dividends to $11,398.49.  My Roth IRA's forward 12-month dividends are $1,065.29.  My Rollover IRA's forward dividends are $4,707.84.  Across all accounts I can expect to receive $17,171.62 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.  CubeSmart'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 CubeSmart?  How recent in their history do you consider a dividend cut in your decisions?  Or do you just avoid them altogether?

Please share your thoughts below.