The Impact of Dividend Increases through June of 2019

When talking about dividend increases, this is us talking about dividend investing, at it’s finest!  Given the second quarter-end had recently passed, I wanted to reflect on what occurred over the last 6 months.  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 are the dividend increases stacking up this year?

Person Touching Macbook Pro

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” the inflation?  Now, as the community knows, uninterrupted dividend increases are a quality we look 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 six Months

Now, with all of that being said, what have dividend increases done for my portfolio through June of 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 6 months of 2019:

So this report now contains the glorious month of April, which bodes quite a few dividend increases.  Procter Gamble (PG) came in, as expected, with a 4% dividend increase.  Then, Kinder Morgan (KMI), sticking to their word, is still jacking their dividend way up (let’s hope it can stay there).

It isn’t all rainbows and butterflies.  International Business Machine (IBM) is really hitting an interesting patch, essentially since they acquired RedHat, with a meager dividend increase of 3.18%.  The BIGGEST surprise during the second quarter had to be the grocer, Kroger (KR).  They walloped in a 14.30% dividend increase, shocking the community.

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 $198.30 was a 1.55% add!  Of course, one can annualize the percentage and equate to 3.10% (Up from 2.5% after Q1).  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 $198.30 to your forward dividend income, based on a 3.50% dividend yield, one would have to invest a whopping $5,665!!  That is quite the punch and would be at least three to five 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 SIX Month Summary

First, I am lucky to make enough money and to save as much as I can.  The savings are for future investments into dividend growth stocks.  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%, 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 $198.30 and it would take almost a $5,665 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.  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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6 thoughts on “The Impact of Dividend Increases through June of 2019

  1. There is the power of dividend increases in action! I have not calculated my total amount from dividend increases yet. I’ll probably do it at the end of the year like last time. Last years dividend increases alone totaled $427 in dividend income for me. These dividend increases add up enormously. I love dividend increases! Congrats on your great increases Lanny! 😀

    • MDD –

      That’s just awesome. Looks like you’ll be on pace to hopefully exceed that – or maybe we both don’t exceed last year, due to slower dividend growth? Hm… what do you think?

      -Lanny

  2. Terrific results at the half way point, Lanny. While raises are down from last year, you’ve still received a nice boost to your forward income. Even your smallest raise is still beating inflation!
    I’ve been able to manage a tad over $346 in new forward dividend income thanks to 2019 raises. I’ve had 6 raises that have been 10% or more, with my largest being 20% from NXST.
    Here’s hoping the dividend raises are strong in the 2nd half of 2019,

    • EngDiv –

      Almost $350, huh? That’s sweet. Can’t wait for the days where we are both at an extra $100 per month added, from dividend increases alone.

      I’ll cheers to that. Looking forward to seeing what PM and others will do the remainder of the year, for sure.

      -Lanny

  3. Lanny,
    Congrats on nearly $200 in increases through the first half of the year. I’ve also noticed that this year has been more subdued in terms of increases compared to last year. While I wish every year could be like last year, it’s useful to see what a more realistic expectation for dividend growth looks like.

  4. Its just amazing what dividends can do and to see them grow is even better than amazing. I dont have 2 many more left this year dont know if MGIC will raise theirs i have MSFT, MO, one more from O and Main and SBUX. dont think ill have any more after that but next year is looking good.

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