The Impact of Dividend Increases through September of 2019

When talking about dividend increases, this is us talking about dividend investing, at it’s finest!  Given the third quarter-end had recently passed, I wanted to reflect on what occurred over the last 9 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” 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 six Months

Now, with all of that being said, what have dividend increases done for my portfolio through September 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 9 months of 2019:

The 3rd quarter isn’t as fruitful as the 2nd quarter.  However, there were so many highpoints during the last 3 months, that I can’t wait to discuss.  In total, I recorded 12 dividend increases over the last 3 months (including another Realty Income (O) and Norfolk (NSC).

McDonalds (MCD) has been on a tear from a stock performance perspective and they didn’t hesitate to reward shareholders with a strong 7.76% raise.  Further, Delta (DAL) has been my favorite airline to fly and has been a great stock to own, as of late.  They came in with a roaring 15% dividend increase, keeping pace with how their growth has been in the last few years.  Lastly, I have to mention, Lockheed Martin (LMT) is a monster! Their growth rate is slowing a bit, but the impact is still one of the heaviest.

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 $333.15 was a 2.60% add!  Of course, one can annualize the percentage and equate to 3.47% (Up from 3.1% 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 $333.15 to your forward dividend income, at a 3.50% dividend yield, one would have to invest a whopping $9,519!!  This would require at least 5-10 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 SIX Month 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 $333.15 and it would take almost a $9,519 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

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14 thoughts on “The Impact of Dividend Increases through September of 2019

  1. We’re at $288 added to our forward dividends from raises alone through the end of 3Q so I’m more than happy about that. I’m surprised to see that your growth rate is so low, I’m assuming it’s because either some big payers are really slow growers or that 4Q is going to be a really busy quarter for raises for you. But I’ve definitely noticed that dividend growth has slowed. The average increase we’ve received so far has been 7.3% which is still pretty solid, but on a weighted basis it’s just 4.6% due to the high yield/low growth holdings through the end of Q3. Although that does include 16 companies that have yet to announce, won’t *GE* and likely SBRA, as well as holdings that I purchased after they had already announced dividend raises for the year. All in all though I’m pretty happy with the results although it’s a bit disappointing after the big raises from last year.

    • JC –

      You are right. There were massive increases last year for quite a few but with much lower raises this year. I do have heavy one’s in the 4th quarter, starting with this month. I’m looking forward to my growth rate to be higher and it’ll finish closer to 7-8% for sure. Visa, WestRock, JohnDeere, AbbVie, etc. are still to come!

      -Lanny

  2. Lanny,
    That is huge. 9k achieved with 0 extra work. Question, for CM are you factoring the 2x increases / year in CAD or just the overall increase netted in USD? Considering everything what is your increase average across all stocks? Sorry for the questions, I am just interested to see how you calculate those as an accountant!
    Keep up the good work, or should I say let your money do the hard work for you.
    – Gremlin

    • Gremlin –

      Thank you for the questions! You are right – CM has performed 2 increases, and I conservatively show just one and estimate what the impact is, which again may be conservative : )

      Secondly – another fun metric/question you have asked! The weighted average dividend growth rate on the taxable account, trailing twelve months, is only 6.55%, down tremendously. I am looking for this quarter to push this back up over 7%.

      You? Thoughts on this? Thank you!

      -Lanny

  3. Always love an increase small or big.
    I have 57 companies in my portfolio and receive so far 44 increases
    Waiting for Starbux and Westrock then I came to a lovely 46 in total this year.

    Regards
    Willem

    • Willem –

      Couldn’t agree more. I always take it. And HELL yeah – that’s a great ratio and I keep the same track of that, as well. Looking to be as close to 100% as possible, of course : ) Love SBUX and WRK!

      -Lanny

  4. They really do help. Coupled with drip it really kickstarts things. I didn’t get as much as I had wanted but I still got over $200 with one more this year.

    • Doug –

      Goodness. How nice is that? $200 and you didn’t have to lift a finger, except layout the initial capital. Congrats Doug – as we know, some years are better than others and makes us appreciate last year!

      -Lanny

  5. I love dividend increases. I still have to add my totals at the end of the year. I don’t think it will be as large as last year, but it will be significant. Congrats on your $333+ in dividend increases! 🙂

    • MDD –

      Thank you! I am hoping that I can be just a little closer to $500 by the end of this year. Big 4th quarter push and a few significant investments I am waiting on for their announcements. The suspense, always, kills me!

      -Lanny

  6. Dividend increases are my favorite thing next to steak and pizza. Maybe #2…

    I kept tabs on them monthly. I wish I had saved my data for the whole year and seen the bigger picture. I am now…
    I have only had one increase so far this month – OHI from .66 to .67. A bit of a lull, but better than a kick in the beanbag!
    cheers,
    John

    • CW –

      Damn… Pizza vs. Dividends debate… I smell an article! haha

      Receiving a dividend increase from OHI is awesome, as their yield makes it a blessing to see an increase. I would say it’s def. better than a kick in the beanbag, no doubt.

      Cheers to you sir!

      -Lanny

  7. As always, you did a great job in illustrating the power of dividend increases to us newer investors! Having to invest nearly $10,000 to replicate the impact of these dividend increases really drives home the point.

    • Kody –

      Thank you! That is a significant part of the goal – education on how the cycle works and dividend increases are a HUGE part to this! What’s crazy is the power the increases will have in 1, 2, 5, 10+ years… can’t even begin to fathom!

      -Lanny

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