Difficulty in Waiting for The Dividend Increase

Each and every month, Bert writes about the expected dividend increases, each and every month.  I love those articles, as it completely HYPES me up for what’s to come.  However, as a dividend investor, who reviews and watches the stock market it is extremely… difficult.  Yes, difficult!  I am in this mode, that I want to let everyone know what I go through during the month where I expected dividend increases, to see if you feel the same or to see what you do to help “ease” the anxiety!

Free stock photo of man, person, hand, laptop

The excitement

Ah, yes!  The first emotion I go through.  Bert rips out his article, like he did a few weeks ago and the excitement is up!  Why else is the excitement up?  Heck, with the Tax Cuts, Jobs Act, the dividend increases have been MORE powerful than EVER.  In my 9+ years of investing, this has been the best year, by far.  Each dividend increase, has more than likely, been superior than the past, in terms of the growth rate.  We all know why the dividend growth rate is powerful (if you do not, read this article).

What is even more exciting, is when you have multiple increases that occur – I had 6 companies that announced in April – Rockwell (ROK), Grainger (GWW), Procter Gamble (PG) and Kinder Morgan (KMI).  As stated, some are consistent, like Grainger, at 6%.  Others, however, blow the hair back, like Kinder (KMI) and announce a 60% dividend increase.  There simply is excitement that drums in the air.  Bert and I always make the statement, “No way that management decides this year, to stop increasing their dividend”.  However, we have been fooled…

The Doubt

Yes, the doubt.  There is doubt waiting for the dividend increase to be announced.  Typically, such as McDonald’s, you can predict the exact day and time, that they will announce their dividend increase.  They announce their dividend increase every 3rd Thursday in September around 4:30PM.  It’s true.  Book that in your calendar.  The only item that may change is the time, but it’s a give or take one hour for their dividend increase.  However, the doubt starts to set when a dividend increase doesn’t become announced on the day you expect.  That crushes the dividend soul, just a bit.  You don’t think you are down and out for the count, as there may still be “days” left in the month for them to announce.

Another example of doubt and despair can occur.  A recent example is Kraft-Heinz (KHC).  Why?  One may ask.  Well, the last two years, in August, they increased their dividend.  Well, as August came and the dividend increase was on our radar, our anticipation and excitement was sky high.  Sadly, August came and… went.  The month came and went with absolutely no dividend increase announcement.  Kraft did not make an announcement.  Guess what?  The whole cycle starts over, as now I have excitement that they’ll announce their dividend increase in November.  Is this a problem?  Do I have dividend investing issues or what?

The relief

The one other emotion that I go through.  A great example is International Business Machines (IBM).  They have received quite the bad rap and bad press, however, the financials are rock solid – from their income statement to the balance sheet.  However, with the negative news and all, they still made that announcement.  The air escapes the body and you can wipe the sweat off, the relief has set in and they have now added ONE MORE tally to the consecutive years to their dividend increase streak.

Why is this streak so important, by the way?  I am constantly hoping that companies can get to 25 straight years of doing this, to become a dividend aristocrat, which also leads to the unique passion to continue it going forward and becomes a bit of a trademark for that company.

However, to get back to the relief emotion – there is also the scattered type of dividend companies that are out there, aka, those that do not announce on a consistent month throughout the year.  Intel (INTC) has been like that recently.  Why do I have relief from Intel (INTC)?  One year they do February, another they do May or August.  The relief that comes when you see an announcement in general during the year, is very “real”.  Are you still hanging on during my emotional ride here?

Dividend Increase Emotion Conclusions

I had to let this one out to the community.  I have gone through October, 18 days already, and no dividend increase announcements for my portfolio.  Will WestRock (WRK) announce?  Or will they pass and go to November?  Will I go through the roller coaster of dividend investing emotions?  I do have a few questions for the community.

1.) How do you cope with dividend increase let down?

2.) How do you cope with managing the anticipation/anxiety of the dividend increase month?

3.) What is your mindset if a dividend increase was to happen (based on history) in the early part of the year but it does not happen?  Do you believe it may happen later on?

Thank you everyone!  I am REALLY curious if there are others out there, that experience the same emotional ride as I do!  After all, the dividend increase is one of the critical reasons why we do this investing.  Thank you for reading & stopping by, and (I am changing it up) please companies – announce that dividend for us!

-Lanny

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21 thoughts on “Difficulty in Waiting for The Dividend Increase

  1. Waiting is the hard part. The really hard part is when they announce a buy right before then don’t raise like HBI did. The hardest point is waiting these last 3 months till next year . But hopefully I get the foot out the door with some massive gains next year. I doubt MO will have as good of a raise next year but can’t rely on them being the heavy hitter, year in and year out. Hopefully a few of the companies I have picked up and will continue to add to like SBUX will continue to deliver nice results.

    • Doug –

      Yep – when there is a huge acquisition, that sucks capital – i.e. CVS as well, you know the dividend probably won’t be raised. I agree, it will be tough to see MO come out with a boom next year as well.

      -Lanny

      PS – went to Starbucks yesterday – and I agree.

  2. Sometimes I have little anticipation leading up, but about the only thing that gets to me is after the announcement of a sub-par increase. I’m bummed. But I try to look at it this way. I set expectations for annual increases for each my stocks. Some of them exceed expectation and some disappoint, but for the most part that balances out over the course of the year. What I will slash my wrist over, is a dividend cut announcement. They absolutely kill my overall portfolio dividend growth for a year if I get caught off guard and happen to be holding one when it happens. Tom

    • Tom –

      I agree on the balancing out. I haven’t had a dividend cut announcement in a while and I hope it stays that way. I can’t believe I’ve had 4 of them happen in 9 years – is that good or bad? Hmm….

      -Lanny

  3. Its an addiction, tried not talking or thinking dividends once for 24 hours. It didn’t go very well, had the shakes and sweats, was so desperate at one point I talked about interest rates just to hold me over to my next fix..

      • Afternoon Lanny,
        yeah joking aside the change in interest rates is interesting, Inflation is also going up so you have to play it just right. You are young enough I don’t think you should lock up any large amounts of cash with the exception of some emergency $$ but just my 2 cents. In this case an online bank is the best option.

        But for those in FI (or retirement) who have cash as a risk buffer I would use a CD ladder so short term CDs can capture any positive movement up in rates.

  4. I keep track of when each of my holdings normally increase their dividend and whenever one happens to skip their normal time I have to admit that it gets me worried a bit. Is there going to be an increase? Do I need to re check the company’s financials because I missed something? More often than not though the companies just keep on raising up the dividend and for whatever reason it just got delayed.

    • JC –

      You and I are very similar when it comes to dividend increases. There are a few on my mind right now. Where’s Kraft’s increase? Where’s DWDP coming in with theirs? Will they? Going crazy!

      -Lanny

  5. Hi Lanny,
    Interesting thoughts! Actually, I am one of those people who don’t track when my companies should raise their dividend. I am always waiting for that Bert’s article, though, to see if he mentions any company that is in my portfolio. So it’s always a nice surprise if I see that one of my holdings raised their dividend recently. Probably, I would only notice that one of my companies didn’t raise their dividend when writing a post for the monthly summary and checking the YoY comparison 🙂
    BI

    • BI –

      True – you would definitely notice this more if you had a “field” in a worksheet you use and/or kept track of who has/who has not increased their dividend, which I do. Drives me nuts!!

      haha

      -Lanny

  6. Hello Lanny.

    I too have become accustomed to viewing Bert’s expected increases. (Thanks Bert for providing us with a consolidated post of increases on a monthly basis.)
    I was very motivated to purchase PG when they decided to increase their dividend again this past April. I can only hope they continue to remain consistent. While the excitement of dividend increases are always exciting and anxiously awaited, I also find much joy in receiving special dividends. Those big juicy dividends you weren’t expecting. For those I’m looking at getting some of Costco when finds permir. A company known for their special dividends. Ford was generous in that department too this past year.
    I will admit however, the feeling one gets when receiving a dividend check no matter the amount. I will have to say I’m more eager on receiving those than my actual paycheck. Even though in value they are less.

    Thanks for the great post.

    • Dr. Div –

      Of course and I do, too, love special announcements that we did not expect. And yes – I get an e-mail each time a dividend is posted and gosh – I love seeing the flurry of e-mails on certain days, just makes me feel like I’m doing something right. Each dollar feels much better than any paycheck dollar, no doubt.

      -Lanny

  7. This is so recognizable
    .
    I’m studying my emotions behind this phenomenon . And please correct me, but for me it is about, anxiousness of being wrong. What if despite serious investigating a stock/company I missed a detail that could have told me that there would be no increase… What if I’m wrong? What if that means that all other positions are bad choices?
    You get where this leads..

    To counter this turmoil in my mind, I accept this will be a learning process and there mistakes can be made. I return to the figures and mostly find I’m still making beyond average yield. So not the growth I anticipated, but still a steady cash flow.

    Good post Lanny!

    • Petra –

      VERY, VERY Good perspective/view point. That’s such a great point, I love it. It’s true. After reading about what they’re doing, their balance sheet, their income statement – everything panned out from what you normally do. BUT, Just BUT what if they don’t increase the dividend and you’re wrong. What does that mean for every other stock up to that point? A learning experience for SURE.

      -Lanny

  8. Great post, Lanny! This describes me to a tee. It wasn’t until about 3 or so months ago that I really began to monitor my dividend portfolio and when I would expect to receive dividend increases/the amount of increases, but I’ve found that it’s something I really enjoy. Sometimes I find my predictions aren’t correct with the timing of the dividend announcement being off or the amount being off, but there’s definitely a sense of excitement that comes from earning a raise that you didn’t have to actively work for. Regardless of if my expectations of dividend increases are met, I just remind myself that as long as the income of the portfolio continues to trend upward, I will be fine.

  9. Great post, and one that resonates with me as I have very similar feelings. Back in August this came to fruition as one of my holdings typically announces their raise in that month…and I kept waiting. The day they usually announce came and went. Maybe they are just late and it will be announced in another day or two. Nope. There was no raise announcement, and in their earnings call they answered an analyst question about it in saying they remain committed to their dividend and felt it was appropriate at the current level.

    As Petra mentioned, this then led to doubt if I missed something in my analysis of the company and/or if this was a sign that the dreaded cut could be coming.

    It is interesting as I feel as though I’ve been doing a pretty good job of keeping the emotions out of the buy / sell side of things, but there are still a great deal of emotions that are triggered with the dividend raises (or lack thereof).

  10. I concur with P2035. Although I’m a DGI and buy stocks which I expect to increase each year. I dont break a sweat about it, I have no influence over it in any way, shape or form.

    “Grant me the serenity to accept the things I cannot change,
    Courage to change the things I can,
    and the Wisdom to know the difference.”

  11. I might be a bit too relaxed as an investor, but I don’t track dividend increase news. If it happens, Yay! If not, then I hope they fix whatever issue they have instead of blindly increasing and trapped in a worse spiral. I’m not a business professional. I’m a medical professional. I let the business people do their thing and my investments have been secure so far in my 3 years of investing.

    Just my take
    -Alex

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