Dividend Increase | BlackRock $BLK #Dividend

Getting a pay raise while sitting on the couch?  Sign me up!  Thanks BlackRock 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 10th the Board of Directors at BlackRock (BLK) announced an increase to their quarterly dividend payment.  The dividend was increased from $5.00 to $5.10 which is an underwhelming 2.0% increase.  Shares currently yield 2.57% based on the new annualized payout.

The new dividend rate will be payable March 22nd to shareholders of record as of March 7th.

This was also the first, of hopefully many, dividend increase among my FI Portfolio holdings for 2024!

Since I own 10.897 shares of BlackRock in my FI Portfolio, this raise increased my forward 12-month dividends by $4.36.  This is the 4th raise I've received from BlackRock since initiating a position in 2020 with the total organic dividend growth over that time coming to 41%.  

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

BlackRock has now raised dividends for 15 consecutive years and every year but one since 2003.  However, 2023 and 2024 were the smallest raises that BlackRock has given save for the freeze in 2009.

Since 2003, BlackRock's year over year dividend growth has ranged from 0.0% to 59.5% with an average of 17.4% and a median of 13.8%.

There's been 17 rolling 5-year periods over that time with annualized dividend growth spanning from 9.1% to 31.3% with an average of 16.7% and a median of 14.3%.

Over that time there's also been 12 rolling 10-year periods with BlackRock's annualized dividend growth landing between 10.2% to 23.7% with an average of 15.9% and median of 14.3%.

The miniscule raises from BlackRock for the last two years are definitely concerning. 

The 1-, 3-, 5- and 10-year rolling dividend growth rates for BlackRock since 2003 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.

BlackRock's 3-year average forward dividend yield is 2.58% which corresponds to a share price of $791 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 $719 - $879 and suggests that shares are currently trading right around fair value.

  

  

Wrap Up

This raise increased my forward dividends by $4.36 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 2.65% this raise is like I invested an extra $165 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 1st dividend increase I've received from the companies in my FI Portfolio.

My FI Portfolio's forward-12 month dividends are $12,198.16  Including my FolioFirst portfolio's forward dividends of $248.12 brings my total taxable accounts dividends to $12,446.28.  My Roth IRA's forward 12-month dividends are $1,284.16.  My Rollover IRA's forward dividends are $5,072.89.  Across all accounts I can expect to receive $18,803.32 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.  BlackRock'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.

Have you received any dividend increase thus far in 2024?  Did they disappoint like BlackRock's or come in higher than you expected?

Please share your thoughts below.