Dividend Increase | Archer Daniels Midland $ADM #Dividend

Dividend | Dividend Growth | Financial Independence | Freedom | Passive Income
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Archer Daniels Midland 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 January 26th the Board of Directors at Archer Daniels Midland (ADM) approved an increase in the quarterly dividend payment.  The dividend was increased from $0.40 to $0.45 which is an excellent 12.5% increase.  Shares currently yield 2.12% based on the new annualized payout.

The new dividend will be payable March 2nd to shareholders of record as of February 9th.

Since I own 76.949 shares of Archer Daniels Midland in my FI Portfolio, this raise increased my forward 12-month dividends by $15.39.  This is the 5th raise that I've received from Archer Daniels Midland since initiating a position in 2019 with total organic dividend growth coming to 34%.  

I also own 113.069 shares in my Rollover IRA and this raise increased the forward 12-month dividends for that portfolio by $22.61.


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

Archer Daniels Midland's dividend growth has historically been quite lumpy with stretches of stellar dividend growth, modest dividend growth, and lackluster dividend growth.  Hopefully with the acceleration in growth rates the last 2 years we're in the beginning part of a modest to stellar dividend growth period.

Archer Daniels Midland is a Dividend Aristocrat with 28 consecutive years of dividend growth.

Since 1995, Archer Daniel Midland's year over year dividend growth has ranged from 2.8% to 66.8% with an average of 11.8% and median of 7.7%.

There's been 23 rolling 5-year periods with annualized dividend growth spanning from 4.3% to 16.7% with an average of 10.6% and a median of 11.4%.

Over that time there's also been 18 rolling 10-year periods with Archer Daniels Midland's annualized dividend growth landing between 8.5% to 14.1% with an average of 11.3% and a median of 11.8%.

The 1-, 3-, 5-, and 10-year rolling dividend growth rates for Archer Daniels Midland since 1995 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.

Archer Daniels Midland's 3-year average forward dividend yield is 2.55% which corresponds to a share price of $71 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 $64 - $78 and suggests that shares are currently trading on the above fair value.
  
  




Wrap Up

This raise increased my forward dividends by $15.39 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 2.57% this raise is like I invested an extra $600 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 4th dividend increase I've received from the companies in my FI Portfolio which have boosted my forward 12-month dividends by $47.83 combined.

This is also the 2nd increase I've received from my Rollover IRA holdings which have raised my forward 12-month dividends by $24.45 combined.

My FI Portfolio's forward-12 month dividends are $11,311.90  Including my FolioFirst portfolio's forward dividends of $234.64 brings my total taxable accounts dividends to $11,546.54.  My Roth IRA's forward 12-month dividends are $1,091.19.  My Rollover IRA's forward dividends are $4,772.64.  Across all accounts I can expect to receive $17,410.37 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.  Archer Daniels Midland'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 Archer Daniels Midland?  How many dividend increases did you receive in the 1st month of the new year?

Please share your thoughts below.

Comments

  1. Solid dividend raise for this stalwart. Happy to hold on to these shares for the long haul.

    ReplyDelete

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