Thursday, July 12, 2018

ONE RAISE AT A TIME | MEDTRONIC KEEPS IT GOING


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.

Last Friday the Board of Directors at Medtronic plc (MDT) raised up their dividend payment to shareholders.  The dividend was increased from $0.46 up to $0.50 per share per quarter.  That's a solid 8.7% increase.  Medtronic has grown their payout to shareholders for 40 consecutive years which gives them the title of Dividend Champion.  Shares currently yield 2.33% based on the new annualized payout.

The new dividend will be paid out on July 25, 2018 to shareholders of record as of July 6th.  

Since I own 92.126 shares of Medtronic in my FI Portfolio this raise increased my forward 12-month dividends by $14.74.  This is the 6th dividend increase I've received from Medtronic since initiating a position in late 2012.  Over that time Medtronic has grown the dividend payout by 92%.  According to US Inflation Calculatorthe total inflation over that same period has come in at just 9.6%



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

Medtronic's dividend growth history is fantastic with dividend growth rates routinely in the high single digits to low double digits.  Since 2003 every rolling 10 year dividend growth rate has been well above 10% which is more than enough to keep me appeased as a shareholder.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1993 can be found in the following chart.  




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

*2018's dividend assumes the new quarterly payout of $0.36 per share is maintained for the rest of the year.

Wrap Up

This raise increased my forward dividends by $14.74 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 2.98% 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 2018 I've received 32 dividend increases from 30 of the companies in my FI Portfolio combining to increase my forward 12-month dividends by $296.67.  

My FI Portfolio's forward-12 month dividends increased to $6,317.91.  Including myFolioFirst portfolio's forward dividends of $82.56 brings my total taxable accounts dividends to $6,400.47.  My Roth IRA's forward 12-month dividends are at $343.29.

Do you own Medtronic in your own portfolio?

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