Welcome to the first ever dividend growth update!
I’ve decided to start publicly tracking dividend growth as it relates to my portfolio starting from this point forward. I’ll update this information every quarter, which will provide relevant and important information on dividend raises announced by the companies I hold equity in, the size of those dividend increases, and how that affects my bottom line with real-life numbers in real-time.
What you see below is every company that I currently own a stake in that declared a dividend increase during the first quarter of 2015. So the ex-dividend date or pay date won’t be counted here. In addition, I only count stocks if I was long before the increase was announced. If I buy a stock shortly after a dividend increase was announced, then I don’t count it here. So this is a true reflection of an actual increase in my income, down to the dollar.
This is really exciting stuff. Dividend growth is what I refer to as the “secret sauce” in building and rolling a snowball. It provides a huge exponential compounding effect, especially as the dividend income grows. And now you’ll get to see how that works with real numbers here.
So let’s see which stocks in the Freedom Fund announced dividend increases this past quarter and how that affects the dividend income I’ll be able to generate moving forward.
| Company | Ticker | Old Per-Share Dividend | New Per-Share Dividend | % Increase | $ Increase (Annual) |
| Air Products & Chemicals | APD | $0.77 | $0.81 | 5.2% | $3.20 |
| Avista Corp. | AVA | $0.3175 | $0.33 | 3.9% | $2.75 |
| Bank of Nova Scotia | BNS | $0.66 CAD | $0.68 CAD | 3% | $1.60* |
| Digital Realty Trust, Inc. | DLR | $0.83 | $0.85 | 2.4% | $5.20 |
| General Dynamics | GD | $0.62 | $0.69 | 11.3% | $5.60 |
| Kinder Morgan Inc. | KMI | $0.44 | $0.45 | 2.3% | $7.20 |
| The Coca-Cola Co. | KO | $0.305 | $0.33 | 8.2% | $14.00 |
| Lorillard Inc. | LO | $0.615 | $0.66 | 7.3% | $9.00 |
| Norfolk Southern Corp. | NSC | $0.57 | $0.59 | 3.5% | $5.60 |
| Realty Income Corp. | O | $0.1834 | $0.1895 | 3.3% | $5.12 |
| ONE Gas Inc. | OGS | $0.28 | $0.30 | 7.1% | $0.64 |
| Omega Healthcare Investors Inc. | OHI | $0.52 | $0.54 | 3.8% | $4.80 |
| ONEOK, Inc. | OKE | $0.59 | $0.605 | 2.5% | $3.30 |
| Raytheon Company | RTN | $0.605 | $0.67 | 10.7% | $6.50 |
| Southside Bancshares, Inc. | SBSI | $0.22 | $0.23 | 4.5% | $2.80 |
| Toronto-Dominion Bank | TD | $0.47 CAD | $0.51 CAD | 8.5% | $4.32* |
| Wal-Mart Stores, Inc. | WMT | $0.48 | $0.49 | 2.1% | $1.52 |
| Q1 Totals: | 5.3% | $83.15 | |||
| YTD Totals: | 5.3% | $83.15 |
*These amounts are reflective of current exchange rates.
Fantastic, isn’t it? That’s $83 more per year in passive dividend income I’ll be collecting. What you see above is essentially, in aggregate, 17 “pay raises”.
And guess what I had to do to receive these pay raises?
Absolutely nada, other than own stock in the above companies.
I didn’t have to show up early, stay late, deal with office politics, make phone calls, manage an email list, or meet quotas.
I just had to sit back and wait.
Patience is tough sometimes, but my progress thus far is proof that patience and persistence works. Since I started investing in 2010, I’ve received countless pay raises every single year. It takes a little time for this to start noticeably working, but the additional cash flow is real.
That extra $83 per year might not sound like much.
But consider that it would take over $2,300 invested at a 3.5% yield to achieve the same effect.
Said another way, that’s $2,300 less I have to invest now to generate that same increase in my annual passive income. Wonderful!
And even better, every dividend raise increases the base upon which future dividend raises will stand. An annual $1.00 dividend that turns into $1.10 is a 10% dividend increase. But if that respective company announces another 10% raise the following year, that means you’re now collecting $1.21, or $0.11 more. Repeat that and you’re looking at $1.33, or $0.12 more. Rinse, repeat, become wealthy.
I once compared my portfolio to a tree, whereby each position is a branch. And each branch produces bountiful fruit. That fruit – the dividends – is what I’ll eventually live off of, choosing to pluck the fruit and leave the branches intact rather than cutting the branches, possibly slowly killing the tree.
Well, this is where the tree starts to tend to itself. It’s growing branches all by its lonesome.
I could theoretically stop investing today and the dividend income the portfolio generates along with these dividend raises would still eventually render me financially independent. The snowball is starting to move along without me. The good news, however, is that I’m not tired yet. I’m not done pushing. So these results will just continue to exponentially increase and improve.
Out of the 53 stocks in my portfolio, this represents the 17 of them that have already increased their dividends this year. Two stocks – Praxair, Inc. (PX) and T. Rowe Price Group Inc. (TROW) – increased their respective dividends just before I initiated my position in each. So 19 of the 53 stocks in the Freedom Fund have actually already handed out “pay raises” this year.
Notably, many of the stocks that are included above generally increase their dividends more than once per year. As such, the YTD total for the percentage increase will continue to factor in year-over-year increases in stocks’ respective dividends, which will be more accurate than averaging out the quarterly totals. However, I’m also including the quarterly totals so you can see true quarter-to-quarter incremental increases in income through dividend growth.
One last important aspect here is that even though the quarterly percentage increase is likely far lower than what the annual result will show at the end of the year, this is somewhere around seven times the inflation rate of 0.8% we experienced last year. So not only is my purchasing power increasing, but it’s doing so at an incredible rate.
Full Disclosure: Long all aforementioned stocks.
Did you have a great quarter for dividend growth? Enjoying the larger “paychecks” you don’t have to work for?
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