The Impact of Dividend Increases through December of 2019

When talking about dividend increases, this is us talking about dividend investing, at it’s finest!  2019 is over.  All dividend increases are in.  This is not any old reflection, but specifically about dividend increases and their impact on my portfolio this year.  Now that tax reform was 2018 news, how did dividend increases stack up this year?

Dividend investing, dividend growth

Why dividend increases matter

Why would dividend increases matter to my investment journey?  The next section will describe the importance of dividend increases.  In short, dividend increases are important, as they define the health of a company.  Further, dividend increases offset the increase in cost of goods (food, energy, shelter, etc.), over a span of time.  This is what you hear when, “inflation”, is discussed.

Why do dividends increasing in the future matter from companies that we own?  When the price of goods are increasing, don’t you want your income to continue to grow, in order to offset or “trump” inflation?  Now, as the community knows, uninterrupted dividend increases is a requirement (typically) prior to investing in a company.  We don’t just invest for current income, but we are investing for a larger, future income too!  For example, Johnson & Johnson (JNJ) increased their dividend 5.55% back in April.  The 5.55% dividend increase outpaces the rate of inflation, which has been stated at 1.5% over the last year.

Does this start to make sense now?  Buying a dividend income stock, that increases their dividend every year, not only pays you a solid rate or income each year, but they also increase their dividend in a way that outpaces the increase in costs/prices or “inflation”.

See – Our Top 5 Foundation Stocks for dividend income stocks with 25+ years of dividend increases

Here is the other kicker to mention.  Most of us are working for employers and, if we are lucky, receive a raise from our employer/clients.  However, sometimes the raise doesn’t touch the rate of inflation or sometimes we don’t receive a raise, depending on performance, how the company or how our clients are doing.  A dividend income stock that increases their dividend, each year, can also take care of that.

I have been lucky and blessed to have the ability to invest into dividend income companies, to say the least, and have seen a rampage of dividend increases this year, that far outpaced any raise that I received, that’s for sure.

Dividend Increase Impact Through 2019

Now, with all of that being said, what have dividend increases done for my dividend portfolio for 2019?  I’ll list out each dividend increase from the monthly dividend income posts, the rate of increase, each dollar impact and the total.  My goal is to show the community, the readers and those that are curious about dividend investing, how wonderful of a plan that it is!

They say proof is in the pudding and here, my friends, is proof that the dividend increases impact my portfolio in a massive way.  Here are my dividend increase results through 2019:

dividend growth, investing, dividend stocks

dividend growth, investing, dividend stocks

The 4th quarter was definitely beneficial.  There were so many high points during the last 3 months, that I can’t wait to discuss.  In total, I recorded 15 dividend increases over the last 3 months (including another Realty Income (O).  For the year, there were 46 companies I owned that raised their dividend!

So what monster dividend growth stocks were there in the 4th quarter?  Easy, Visa (V), Starbucks (SBUX), Hormel (HRL) and AbbVie (ABBV).  These 4 companies increased their dividend in the double digits, with Visa leading the packt.  The combined 4 increases added $30.74 to my go forward basis.  Any surprises?  FirstEnergy (FE) came in with their second consecutive dividend increase and I couldn’t be happier about that.

See – Financial Freedom Products

In general, dividend increases are down versus prior year, to say the least.  Bert wrote about the slow-down in dividend increases and if we should worry or not.  I am not worried.  In fact, I am very pleased, still!

Based on my forward income, at year-end of 2018 ($12,772.30), this $415.90 was a 3.26% add!  This is less than the pace I was on last year.  This is proof that dividend increases, in general, are simply down.  Tax Reform has come and gone.  Now, it’s really time to see how companies can perform in a more, “real”, economic year.

In order to add the $415.90 to your forward dividend income, at a 3.50% dividend yield, one would have to invest a whopping $11,883!  This would require at least 7-10 solid dividend stock purchases.  Obviously I had to commit the up-front capital, in order to make the investments into high quality dividend income companies, but each dividend increase did not take a decision from me.  This should be the point where it all, “clicks”.

See – Power of the Dividend Growth Rate

Dividend Increase 2019 Summary

First, I am lucky to make enough money and to save as much as I can.  However, my goal here is to drive the main point home that dividend investing is EXTREMELY powerful.  As you noticed above, not every dividend increase is gigantic.  The range can be 2% through 25% and having a diversified portfolio helps!

The huge BUT here, is that each dividend increase, when added together, produces incredible results.  Each of those dividend increases above, added up to $415.90 and it would take almost a $12,000 investment for that to happen!  Does it take saving, investing and patience?  Hell yes it does and a “whole lot of it”, in this game.  However, with these results, wouldn’t you do it, too?

Thank you everyone for coming by to read another dividend investing lesson with the proof in the pudding example above.  I love to be full disclosure, especially if it helps beginners, experiences investors or readers who simply want to learn more.  Are you experiencing the same benefits above?  Does this help show the benefits of being a dividend investor?  Please comment below and, as always, good luck and happy investing!

-Lanny

11 thoughts on “The Impact of Dividend Increases through December of 2019

  1. Love getting those dividend raises! Honestly probably more than making new purchases because I do absolutely nothing for them! 2019 was a good year with the raises for our FI Portfolio increasing our dividends by $327. Which was only about 2/3 the total from 2018 which had the benefit of the corporate tax cuts. However, we ended up with a weighted dividend growth rate of just 5.2% for 2019 which was a bit disappointing. 2020 has gotten off to a good start with O and APD already announcing their raises!

    • JC –

      I can agree with you, that it is more exciting than the dividend stock purchase. Why? Because your income grows from the seeds you planted and all gardeners know they love seeing the sprouts occur!

      Nice work – $327 is HUGE when you think about it. I was bumping up closer to 6% on the year. INTC announced, as well, at 5%. Let’s GOOOO!!!

      -Lanny

  2. Lanny,
    Can I get a Hot damn?!
    I don’t keep tabs on my increases as thoroughly as you all, but I do track the number of times and percentages – and man all the extra income is staggering. Its easy to look at this when you first start and say ‘man that ain’t nothing’, but here we are and its huge.
    – Gremlin

    • Gremlin –

      Hot dayum!!!

      I love seeing what the average growth rate is for the portfolio. It def. is easy to say it isn’t anything – few cents/dollars here and there, as an impact. However, in time – adding an extra $35 per month is legit!

      -Lanny

  3. Congrats on the $416 of dividend increases received during 2019! This really demonstrates the power of just one component of the trinity of dividend growth investing. When combined with reinvestment and fresh capital contributions, it really adds up!

  4. Nice article! What most don’t understand is that dividend increases contribute towards you receiving more income for less money invested!
    You’ll hear or read that you need $1Mill invested to receive $40,000 of income. That means it cost you $25 to receive $1 dollar of income ($1,000,000 / $40,000 = $25). But for income investors, if they calculate exactly how much money they’ve contributed (not the market value) and divide it by the income they receive, they’ll find their dollar cost of $1 of income is much lower.

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