Friday, February 24, 2017

Dividend Growth Investing at Work - Another Classic from this Champion


Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?  Dividend growth investing is far from a get rich quick investment strategy, rather you need to remain focused on the long term goal to be successful.


To no one's surprise the Coca-Cola Company (KO) announced yet another dividend increase to build on their storied history.  The quarterly dividend was increased from $0.35 to $0.37.  That's a solid 5.7% raise.  2017 will mark 55 consecutive years of dividend growth from Coca-Cola giving them the title of Dividend Champion.  Shares currently yield 3.59% based on the new dividend rate.

Since I own 163.541 shares of Coca-Cola in my FI Portfolio this raise increased my forward 12-month dividends by $13.08.  This is the 6th dividend increase that I've received from Coca-Cola since initiating a position in 2011.  Cumulatively my Coca-Cola dividends have risen by 57.5% from dividend growth alone!  According to USInflationCalculator the total rate of inflation over the same period is just 8.0%.  

 
A full screen version of the chart can be found here.

Coca-Cola's 55 year dividend growth streak is truly impressive.  However, amassing a lengthy streak is easy if you just do token increases.  That's not been the case with Coca-Cola.  

dividend growth investing, dividend increase, financial independence
Coca-Cola (KO) Annual Dividend and Rolling Dividend Growth Rates
*2017's annual dividend assumes 4 dividends at the $0.37 payout.

An interactive graphical version of the previous chart can be found here.

Coca-Cola has been a model of consistency when it comes to dividend raises.  However, one bit of concern is the recent "small" raises that came to just 6.1% and 5.7%.  Much of that has to do with the fact that Coca-Cola is truly a global company so a strengthening US dollar has an out-sized effect on the company's numbers.  Over time this should even out, but with struggling revenue growth even when factoring out foreign exchange dividend is likely to stay kind of muted until the US weakens.

    Wrap Up

    My forward dividends increased by $13.08 with me doing nothing.  That's right, absolutely nothing to contribute to their operations save for drinking some of their products.  Based on my portfolio's current yield of 2.91% this raise is like I invested an extra $450 in capital.  Except that I didn't!  One of the companies I own just decided to send more cash my way.  

    That's how you can eventually reach the crossover point where your dividends received exceed your expenses.  That's DIVIDEND GROWTH INVESTING AT WORK!  The beauty of the dividend growth investing strategy is that you build up your dividends through fresh capital investment as well dividend increases from the companies you own.

    Thus far in 2017 I've received 6 dividend raises from the companies that I own increasing my forward dividends by $30.68.

    Previous raises announced this month:
    3M Company (MMM) (Stock Analysis)
    PepsiCo, Inc. (PEP) (Stock Analysis)

    My FI Portfolio's forward-12 month dividends increased to $5,589.80.  Including my Loyal3 portfolio's forward dividends of $68.84 brings my total taxable accounts dividends to $5,658.64.  My Roth IRA's forward 12-month dividends are at $283.30.

    Do you own shares of Coca-Cola?  Was the nearly 6% raise enough for you?

    This article was written by Passive Income Pursuit. If you enjoyed this article, please consider subscribing to my feed.

    0 comments:

    Post a Comment

    Recent Posts From DIV-Net Members