The Impact of Dividend Increases through June of 2018

Dividend investing at it’s finest!  I thought now would be a great time to reflect on what has occurred over the last 6 months in the dividend income portfolio of mine.  I do not mean just any old reflection, but I am going to be specifically talking about dividend increases and what the impact has been on my portfolio this year.  Tax reform has truly showed their colors and companies have been sending the savings, or part of, to their shareholders.

Person Touching Macbook Pro

Why dividend increases matter

Why does this matter?  Why would dividend increases even matter to my investment journey?  This is where a little bit of a breakdown needs to occur.  The cost of goods increasing; say milk, gas and food or for what we hear in the news, “inflation” has gone up and usually continues to go up over time.  Now, as the community knows, dividend increases are typically a requirement for when we invest!  We don’t just invest for current income, but we are investing for the future potential income too!

Why do dividends increasing in the future matter from companies that we own?  When the price of goods are increasing, don’t you want that income to continue to grow, in order to offset or “trump” the inflation?  For example, Johnson & Johnson (JNJ) increased their dividend 7.15% back in April.  The 7.15% dividend increase far outpaces the rate of inflation, which has been stated at a tad over 2% 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 each year, but they also increase their dividend in a way that outpaces or should outpace the enemy called, “Inflation” (see Our Top 5 Foundation Stocks for great dividend income stocks that have increased their dividend each year for 25+ years!).

Here is the other kicker that I wanted to mention.  Most of us are all working for employers and, if we are lucky, receive a raise from our employer or from our clients.  However, sometimes the raise doesn’t touch the rate of inflation or sometimes we don’t receive a raise, depending on performance of what we do, how the company or even 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.

Dividend Increase Impact Through Six Months

Now, with all of that being said, what have dividend increases done for my portfolio through the end of June 2018?  I’ll list out each dividend increase from the monthly 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 6 months of 2018:

The dividend increase announcements that these companies have had this year have been nothing more than remarkable.  Kinder Morgan (KMI) has had the most intense increase of 60%, adding over $40 to my dividend income portfolio.  Further, the unexpected dividend increase announcement from not just Philip Morris (PM), but from John Deere (DE) and Caterpillar (CAT), were well received and tremendously impacted my forward income.

Based on my forward income, at year-end of 2017, this $329.84 was a 3.39% add!  Of course, one can annualize the percentage and equate to 6.78%.  In order to add the $329.84 to your forward dividend income, based on a 3.50% dividend yield, one would have to invest a whopping $9,424!!  Please re-read that.  I would have to invest ALMOST $10,000 into the stock market in order to generate that much forward income.  What did I have to do, in this case?  Not a DAMN thing.  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, for a lack of a better way to phrase it, “clicks”.  This is in line with why we think the power of the dividend growth rate is real!

**to note – this article was written before Kroger (KR) announced a dividend of increase, which would have added $4.28 to the above total!

Dividend Increase Six Month Summary

First, I am lucky to make enough money and to save as much as I can, to make investments into dividend growth stocks.  However, I hope that my goal of driving home that dividend investing is extremely powerful.  As you noticed above, not every dividend increase is gigantic, in fact, about half are below the double digit mark.  The huge BUT here, is that each dividend increase when added together, produces incredible results.  Each of those dividend increases above, added up to $329.84 and it would take almost a $10,000 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, could 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.  Have you been enjoying each and every dividend increase announcement?  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

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32 thoughts on “The Impact of Dividend Increases through June of 2018

  1. Got to love those dividend increases! Through the first half of the year I’ve had 33 raises from 31 companies that have increased my forward dividends by $304.04. It would take just over a $10k additional investment at a 3.0% average yield to generate that same growth to my dividends. Dividend growth investing really is fantastic and that’s a big reason that I was drawn to it several years ago. Keep pushing forward and I can’t wait to see what the 2nd half brings!

    • JC –

      Thank you for the comment and WOW, 33 raises is R I D I C U L O U S! I have seen you pump out article after article about those divvy increases. And it looks like we are in the same boat with the impact of the growth rates. Let’s keep it going for another 6 months.

      -Lanny

  2. Great post!

    Same for me. So far I received 15 dividend increases within the first 6 months of this year. Total is +83,86 EUR and it would need approx. 2.396,- EUR to get the same amount through new investments.

    Love the dividend growth story because the only thing you need to do is wake up in the morning and live your life!

  3. Your post encouraged me to do the same calculation for my DG portfolio. I knew I was having a good year, but was surprised to have a 4.2% dividend increase rate or 8.4% annualized. This is by far the best period of time I can remember for dividend increases in my portfolio. And fortunately, I have had no reductions in 2018. They are the dividend growth killers and I have had my share over the years. Tom

    • Tom –

      WHOA! That’s a damn nice dividend growth rate. It could also get better as the year wraps up, you never know. Regardless, I am happy you went back to check your own stats, to see how you are doing. Let’s get it!!

      -Lanny

  4. “$329.84 and it would take almost a $10,000 investment for that to happen!”

    This is the strongest statement and loved you drove this point home.

    • Ken –

      PUMPED that you love it! I hope this gets to reach more individuals who are curious about what we are preaching here on the blog. It works! It really, truthfully does. Luckily, no dividend cuts this year and with Tax Reform – has led to great increases for 2018. Keep it coming!

      -Lanny

  5. I agree with above commenters. It’s amazing the amount of capital you would need to deploy to get the same results. It really shows the power of DGI.

    • Robot –

      Exactly. Good Lord that would take a lot of capital. However, with all of the time, consistency with investing and just letting it do it’s thing has worked wonders! Also, I’m having fun while doing it, as you can tell!

      -Lanny

    • Mike –

      Thank you and that was the goal! Trying to show what it all looks like. After years of doing this, the numbers are always there as fact. I am still stunned by how much gets added, on an annual basis, from just dividend increases. Cheers to hoping this continues!

      -Lanny

  6. Awesome results, Lanny. You’ve got your portfolio working for you!
    I also keep track of this, so I didn’t have to do too much to obtain the following numbers for my portfolio…
    Through the first half of 2018 I’ve had 29 dividend raises from 25 companies that have increased my forward dividend income by $532.80. This translates into a 7.28% growth rate for me over the 1st half. Holy smokes!
    I had an outstanding Jan. and Feb., which is where most of the income came from. I don’t expect to double this in the 2nd half since more than half my portfolio companies have already provided a raise, plus I had some monster increases in the 1st half that I can’t reasonably expect in the 2nd half from the remaining companies.
    It would take a $19,660 investment at my portfolio’s 2.71% average yield to generate that same forward dividend income… Amazing!
    Thanks for the inspiration to grab these numbers and examine them, Lanny, as it certainly motivates the community to keep up our DGI efforts.

    • Engineering –

      WHOA. 29 raises from 25 companies – assuming you have Realty Income in there! $532…. wow… just wow. That’s SO MUCH from increases alone, we are talking almost $50/month was added haha, I love it.

      Of course. I’ll continue to pump out the content that I use to help me track and figure out how the portfolio is doing, to which it helps when analyzing the next investment, no doubt.

      -Lanny

      • Yes withen the last 6 months. Wont be over $200.00 unless i get a major surprise but will definitely be over next year. while i had raises from NRZ and CIM and 4 from OHI last year those lost ones were offset by when my mom gifted me PEG XOM and PPL. of course additions to my account from adding to stocks help also.

  7. Wow Lanny, those are some awesome numbers to see increase. I knew that dividend increases had power, but I did not know quite that much. Unfortunately, I haven’t started tracking my increases yet 🙁 I will have to do that for sure going forward, I do know off the top of my head that two of my biggest companies upped their dividend (thank you Intel and Cisco). I will start tracking this, and will look over my numbers once again as well. As always, keep pushing forwards to FI!
    -Jake

    • Jake –

      Definitely! Once you start, it gives you more info – such as – do you invest something at a 3-4% yield with a growth rate of 2-4% or something with a similar yield, that increases 7-8%? It makes it better/useful from an investment decision standpoint.

      -Lanny

  8. Lanny,
    Absolutely. Raises are the secret sauce. I don’t do a great job of tracking exact individual $ from increases, but I track them all and it is easy to notice how they pile up over time.
    – Gremlin

    • Gremlin –

      The secret sauce. Nice tag line! I do track it on an annual basis, moreso, from what % they increased it. The growth rate, due to tax reform, is climbing up quite a bit, so far, this year!

      -Lanny

  9. Do you ever feel guilty or like you are missing out on growth with the fact that you dont own any FANG stocks?

  10. Very profound Lanny. It reminds of the time when I figured out the relationship between one’s saving’s rate and early retirement. The idea that not only do dividends add up to a substantial amount, but that you would need a significant amount of capital to generate those dividends – capital that you didn’t have to come with. It’s a good reminder of the power of dividends. We all here about compound growth all the time, but usually in the context of the overall portfolio value or with very large numbers. The example you provided expertly focused on dividends in a way that even the most beginner among us can understand.

    Thanks for the reminder of the power of dividends!

    • DP –

      Exactly. When you see what it starts producing on it’s own and then equate that to how much capital would be needed to generate that top of forward income – the numbers become staggering. Picture if my portfolio was twice the size…. I would need, then, $20K to produce $660 on a forward basis? That’s serious coin, there. We must keep this in mind as we make our dividend investing decisions – as the long-term potential, is amazing.

      -Lanny

  11. I always get the comment of “even if you save $1mil it’ll throw off $35k” and i have never been able to verbalize the response, of yes, but it isn’t a million of NEW money. I think your $10k example does an okay job of starting the conversation. I wonder if you could create a spreadsheet that builds on this anti-dividend rhetoric?

    • Evan –

      I think I could… that’s a good idea. You don’t have to have $1M in one instant investment. The $1m builds over time – for some it takes 20 years, some 5 and some 10 years – all depends on two easy items in the equation – income and savings rate. However, if you do more, earlier, into divvy stocks – the more dividend increases, reinvestments, etc.. You can really start to roll up that snowball. Appreciate the comment and I’ll have to think about the best way to showcase this in a spreadsheet.

      -Lanny

  12. Great post on the power of dividend increases. I had a realization of that kind of power last month. I ran the calculations and saw that I received an additional $244.55 to my forward annual income just from dividend increase alone over the first 6 months of the year. Incredible! And Congrats on your amazing increase as well! 🙂

    • MDD –

      I couldn’t agree more! That is awesome you are seeing the realization of it and I think more of us need to see it/feel it/taste it. Holy Crap, though, $245 is a significant chunk from them. Let’s keep it up!

      -Lanny

  13. Great post – I was actually just looking at the impact of the DRIP’s & Divy increases on my portfolio over the last couple of months, and I’m projected to make an extra $230 more than I was a few months ago already!

    The importance of growing dividends is HUGE – I feel too many people get stuck chasing Yields(usually unsustainable), rather than looking for good companies, at value prices, with a growing dividend!

    Best of Luck in July

    • Jordan –

      I dig it. A lot of people will focus on the high yield, that’s not sustainable, or the hot topic stock/other asset (currency, bitcoin, option) to “hope” for some form appreciation. Not being overly aggressive or wanting too much from one stock does the trick. In your case, $230 is a massive jump in forward income – and that’s done automatically – through great companies performing well and through reinvestment. The beauty, of it all.

      -Lanny

  14. I was just reading a chapter on inflation in Philip Fisher’s ‘Common stocks and uncommon profits’. This is so true about dividend increases outpacing inflation! Great example!!

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