The Impact of Dividend Increases through March of 2019

When talking about dividend increases, this is us talking about dividend investing, at it’s finest!  Given the first quarter-end had recently passed, I wanted to reflect on what occurred over the last 3 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 7.15% back in April.  The 7.15% dividend increase outpaces the rate of inflation, which has been stated at 2.3% 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 great dividend income stocks that have increased their dividend each year for 25+ years!).

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 Nine Months

Now, with all of that being said, what have dividend increases done for my portfolio through March 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 3 months of 2019:

Notice anything up there?  I do.  Only ONE company has a double digit increase, Armanino Foods (AMNF).  All others, are below, with only T. Rowe Price (TROW) coming close.  Pepsi’s (PEP) was the most shocking out of the bunch at 3%.  They usually had a, or close to, double digit growth rate and it was tough to see this one.  Further, UPS (UPS) is having a tough first quarter/4 months and the 5.5% is okay in my books.  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 $80.81 was a 0.632% add!  Of course, one can annualize the percentage and equate to 2.53%.  This is less than half of 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 $80.81 to your forward dividend income, based on a 3.50% dividend yield, one would have to invest a whopping $2,309!!  That is quite the punch and would be at least one, if not two, 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”.  This is in line with why we think the power of the dividend growth rate is real!

Dividend Increase three 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.  In fact, this year all but one increased their dividend by 9% or less, with only one above two digits.

The huge BUT here, is that each dividend increase, when added together, produces incredible results.  Each of those dividend increases above, added up to $80.81 and it would take almost a $2,310 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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10 thoughts on “The Impact of Dividend Increases through March of 2019

  1. Lanny,
    I really should do a totaling of my dividend impact the way you both do. I do ferociously track them otherwise. Dividend increases really are the secret ingredient in all of this (along with consistency and savings, but those seem more well known). Every $30 more companies hand back to you is as if we put another $1k in the market, and though it starts off small after 5-10 years those increases can feel huge.
    – Gremlin

    • Gremlin –

      What’s fun is owning a company for 5, 10 years and knowing how big the income project has grown on them. Saving is HUGE, but putting it out into the market and finding the right companies with the fundamentally sound financial stability, and the history/expectation of similar dividend increases going forward. Also, time plays a big factor in all of this too!

      -Lanny

  2. They definitely help. and i love them. One thing im trying to do is transition to get better dividend growth from companies i own. its great to see those press releases when a company raises their dividends.

    • Doug –

      It’s true, the growth packs the hidden punch. It’s the moment when you look back at your dividend growth and wonder how it’s all possible… well… dividend growth is a HUGE piece of it, no doubt.

      -Lanny

  3. Dividend increases are two great words to hear together. I have not added up the number of how much my dividend increases totaled, but I will do that at the end of the year (or maybe mid-year would be cool). Last year was a great year for dividend increases and while this year appears to be a bit smaller in this regard, I think it will turn out to be another good year. Dividend increases really do make a big impact! Thanks for the post Lanny! 🙂

    • MDD –

      They are the best. I am still antsy waiting for them, no doubt. I’ll have to revert back to 2017 and see how they compare, you know? I am excited to see others increase them throughout the year, such as Pfizer, Visa, etc..

      I am waiting on LyondellBasel to make their announcement this month, too. Curious/anxious, always!

      -Lanny

  4. $80 in dividend increases is pretty solid through a quarter of the year! That would be a huge increase in my dividend income. As Warren Buffett once said, “No matter how great the talent or efforts, some things just take time. You can’t produce a baby in one month by getting nine women pregnant.” It’s great to see that the years of diligent saving and investing are starting to really pay off for Bert and yourself. It’s an inspiration to those of us just starting out.

    • Kody –

      What a great analogy, haha. I have never heard that one before, but will have to remember it. Just as long as no wives or girlfriends are reading this, haha.

      Time plays an insane role, no doubt. I have benefited from so many years of continual increases by owning companies for a long period of time, such as Intel, Realty Income and Aflac. The snowball rolls and rolls faster/heavier with more time.

      -Lanny

  5. I showed this post to a co-worker who might finally be starting to see the light, and the one section that really hits home for me is
    “Each of those dividend increases above, added up to $80.81 and it would take almost a $2,310 investment for that to happen!”

    I don’t see it as getting $80.81 without investing the $2310, I see it as being able to use that $2310 to now invest in other dividend stocks and basically double that $80.81 to $161.62 (if that makes sense). To me, dividend investing is a snowball rolling at 4x speed. You got the initial investment earning dividends, and hopefully growing… those dividends being reinvested…plus more principal being invested…which then earns more dividends….and faster…and faster…

    How more people don’t get this is beyond me!

    • Brett –

      First, THANK YOU for sharing this post with a co-worker. Keep spreading why dividend investing is the way to go and the power behind it!

      Secondly, that’s a PERFECT/other way to think of it. You can now have the ability to double down on dividend investing, when you see the power of dividend growth! I love your example, actually.

      Thirdly, this is clockwork. Invest in dividend stocks. Dividends are reinvested into more shares. Dividend increases occur. Invest in more dividends stocks. Dividends being paid are even higher. Those dividends are reinvested. Another round of dividend increases. AND… tired yet? haha. It feels like magic, it really does.

      -Lanny

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