Recent Dividend Increases

As a dividend growth investor, one of the primary objectives I seek is passive dividend income from my investments that increases over the rate of inflation, annually. It’s always wonderful news when companies decide to reward loyal long-term shareholders with a dividend raise. Some recent dividend increases include:

The Procter & Gamble Company (PG) raised its dividend 7%. The new rate of $0.6015 per share quarterly is a nice increase over the old rate of $0.562 quarterly per share. Overall, I love this company. Some investors have questioned some recent moves, lack of innovation over the last few years and management. But, I consider this one of those core dividend stocks that most dividend growth investors would be wise to hold. PG owns 26 billion-dollar brands. Not particularly cheap right now, but does have a yield just north of 3% after the recent raise. A pullback of 5% or more from here might get me interested in adding to my position. PG now has 57 consecutive years of dividend raises. That’s a prime example of rewarding shareholders through all kinds of economic cycles and macroeconomic concerns. Great stuff!

Johnson & Johnson (JNJ) recently increased its quarterly dividend from $0.61 per share to $0.66 per share. This is an increase of 8.2%. Simply fantastic. This is Johnson & Johnson’s 51st consecutive year of dividend growth. Amazing, right? Like PG, these shares aren’t particularly cheap here but JNJ is one of my biggest investments and for good reason. The biggest, and one of the best diversified healthcare companies in the world. I’m glad that JNJ is one of my biggest positions. I don’t have plans to add capital here in the short-term, but I love this company long-term.

Exxon Mobil Corporation (XOM) also reported a nice increase in its dividend, up 10.5% from an old quarterly rate of $0.57 per share to the new rate of $0.63 per share. You know, I’m far from perfect and as an investor I’m learning every day. I do somewhat regret my sale of Exxon Mobil shares as I felt the low yield combined with the (then) low dividend growth rate warranted a sale. Looking back on it I feel justified, but not long after I sold my shares XOM decided to start hiking the dividends at a more attractive pace. I may re-initiate a position with this company in the future, as I like the massive scale in an industry where scale is extremely valuable. XOM now has 31 years of consecutive dividend growth.

Chevron Corporation (CVX), another oil supermajor, recently hiked the dividend by 11.1%. The new rate of $1.00 quarterly per share is a fairly substantial increase over the old rate of $0.90 per share quarterly. I’m currently long CVX and find the company very attractive, even at current prices and energy is likely where capital is going to go next month. This is Chevron’s 26th consecutive year of raising the dividend and this streak doesn’t appear to be ending anytime soon. Oil is still in high demand worldwide, and as middle class consumers rise up from extreme poverty in many developing nations there will only be increased demand on oil and energy in general.

Kinder Morgan Inc. (KMI) raised the dividend for the 6th quarter in a row, from $0.37 per share quarterly to $0.38 per share quarterly. This is an increase of only 2.7%, but this is the second dividend increase so far this year (the first being 2.8%) for KMI and I anticipate similar raises the rest of the year. I love KMI at these prices, and if I had a smaller position I’d be actively increasing it. Heck, I might do so anyway. This is a great business model (energy pipelines and energy storage) and KMI is one of the biggest and best at what they do.

Excited about these recent dividend raises? 

Full Disclosure: Long PG, JNJ, CVX, KMI

Thanks for reading.

Photo Credit: FreeDigitalPhotos.net

Comments

    • says

      Anonymous,

      Absolutely! I couldn’t name a time or job in my life where I was so richly rewarded as I am as a shareholder in high quality businesses. Just one of the reasons I’m trying to move from the working class to the investor class. The grass truly is greener!

      Best wishes.

  1. Gianluca says

    Jason what about HRS? They just confirmed the quarterly 0,37 dividend as it was last year, so no increase.

    • says

      Gianluca,

      HRS actually raised their dividend twice in 2012, the most recent of which was the raise to $0.37 per share quarterly for the September payment. So they still have plenty of time to raise it yet again.

      Best regards.

    • says

      MFIJ,

      I’m happy as well. Getting raises like these are hard to come by in almost any other situation, especially at a normal 9-5. The investor class is ripe with opportunity and reward.

      I hear you on PG being a bit rich here, but XOM is less richly valued I believe. I wouldn’t mind buying XOM shares here at these levels. But, of course I wouldn’t mind a 5-10% broader pullback to bring all companies down a bit!

      Take care!

    • says

      Aspenhawk,

      Thanks for the continued support. Very much appreciated. :)

      This is just another sweet piece of dividend growth pie. I’ll never have my fill, as each slice is bigger and better tasting than the next.

      Best regards.

  2. Anonymous says

    I love dividend increases! I currently hold positions in most of the companies you mentioned (PG, JNJ, XOM, and CVX) and hearing news of increased dividends always puts a smile on my face. Each and every share I own is like a little worker-bee that pays me :D

    • says

      Anonymous,

      Absolutely. Money can work harder than I ever could, and each little dollar that goes out there and works for me is one less dollar I need to go out and work for myself. That is certainly very wonderful, as compounding interest ensures those dollars will surely multiply many times over.

      Best wishes!

  3. Onassis says

    Hi Jason,

    all five companies are very grandiose!
    Already I have a small portion (600 EUR) of P&G in my portfolio.
    I´ll try to buy the other four companies within the next 6-12 month!

    Your article has encouraged me again, to invest in these companies as fast as possible!

    I love your regular contributions! :-)

    Keep going!

    Onassis

    • says

      Onassis,

      Thanks! Glad you enjoy the posts. I’m here to inspire and help people achieve their dreams!

      Great job owning a slice of PG. Certainly hasn’t performed as well as some other companies over the last couple years (KMB comes to mind), but I still think this is a powerhouse of a company with a plethora of wonderful brands. They’ll wake up and get back to doing what they do best.

      Best regards!

  4. Paige says

    Hey DM, XOM is the only one I am invested in at the moment, and I was really happy with the dividend increase! This is my first full year of dividend investing, but I hope to be adding PG, CVX, JNJ along with others, within the next year or two. It’s nice to know I have an increasing stream of income from my “side” job!

    • says

      Paige,

      That “side job” will be providing many, many pay raises over the years. Get used to being rewarded more at your side job than your main job. It’s going to be fun. :)

      Best wishes!

  5. Spoonman says

    Great post, DM. This is one of the reasons why dividend growth investing is such a powerful long term strategy.

    I own all of those companies, except KMI. This has been a great month for dividend growth investors across the land!

    Last year I got a promotion at work…a paltry 2.99% pay increase (I’m sure the hundreth of a percent they shaved off will really save the company a ton of money). The pay increase from my dividends are far more generous.

    • says

      Spoonman,

      Thanks! A powerful long-term strategy is right.

      This has definitely been a great month, if only because a lot of the higher profile companies that are common holdings for many dividend growth investors happen to raise the dividends during the month of April.

      The pay increases that come with being an investor are quite a bit more attractive than the ones that come from being a worker. I don’t actually receive raises at work implicitly. Rather, I only receive a “raise” when we hike our labor rate up at our shop. This is because I’m on a 100% commission pay plan. It turns out to be maybe 0.01% more money in my pocket when this happens. Funny what can constitute a raise sometimes.

      Congrats again on nearing that five figure dividend income mark! :)

      Best regards.

  6. says

    Hi DM!

    Love the dividend increases this month, last month too! Hell February even topped March & April. 2013 is starting off great!

    I know you regret the XOM sale last year, but look closely at what actually happened. -I looked it up because I am always curious about things like this- XOM is up a buck since you sold it, and the dividend is sub 3% had you held. You made a killing with UNS, plus received a handsome dividend. AVA is up 10% or so + a better dividend too. Clearly the utilities were the way to go! You my friend, are a genius! Good work!

    I wouldn’t want to buy utilities right now infact I’d lean towards selling. I am thinking about trimming a couple positions, UNS being one of them. I’m just not sure what to do with the proceeds. The remainder of my UNS position is on the chopping block… I don’t think that company is worth $50/share…

    Cheers

    • says

      Compounding Income,

      Hey, thanks for pointing that out! I guess the XOM sale did work out in my favor. Other than the taxes paid on the capital gains, it sounds like I made a fairly prudent move there with reinvesting that into the utilities. Maybe I’ll get back into XOM. Certainly one of those bread and butter “set it and forget it” type stocks, and is certainly a high quality company. I think the energy sector (and perhaps a Canadian bank or two) is where I’m going to be looking for next month’s purchase(s).

      I wouldn’t be buying utilities either right now. REITs are another sector where the high yield has been enticing retail and institutional investors alike, so I’ll keep focusing on high quality businesses where the valuations are a bit more attractive.

      I don’t blame you for putting the rest of the UNS shares on the block. I sold mine in one fell swoop and felt perfectly comfortable about it. They were just way too expensive.

      Best regards!

  7. says

    I was hoping to get a chance to pick up shares of CVX, JNJ, and PG before their increases but Mr Market didn’t give me the chance. I almost got some CVX but missed my limit order by about $0.25. Still glad to see yhese increases.

    • says

      Pursuit,

      Mr. Market isn’t giving us a chance with many businesses. That’s just the way it is right now. He’s bi-polar and right now he’s definitely manic. I’m anxiously awaiting the moment he turns depressive and ready to sell shares to high quality businesses at a discount.

      Take care!

  8. Anonymous says

    Im so glad I read your blog this morning, I somehow missed that CVX dividend hike. Wow, do I love changing those figures on my spreadsheet!

    • says

      Anonymous,

      Yeah, both oil majors had some pretty large dividend increases. I’ll take 10%+ raises on pretty strong entry yields any day of the week. And, I’m sure your spreadsheet is going to love it as well! :)

      Best wishes.

  9. gibor says

    I am always trying to add positions of dividend aristocrats on dips, thus last year I added positions PEP and JNJ, last week I added PG on this 6% dip. As for CVX and XOM….I personally prefer COP shares on dip beginning of the year.

    • says

      gibor,

      PG had a nice dip there after earnings, but it’s still a bit pricey for me. I wouldn’t mind another 5% dip or so and maybe adding to my position. My PG position is a bit smaller than I’d like it to be.

      Hopefully we’ll get what we’ve been waiting (asking) for: a nice dip in the action. We’ll see!

      Best regards.

  10. gibor says

    Mantra, last year PG had a similar dip….I was waiting for more and missed the opportunity :) This time I just added about half additional shares to ny existing position that I bought at $62.15

    • says

      gibor,

      Great entry point there. I bought most of my shares around that level too, and would be simply ecstatic if we were to see those prices again. Alas, it’s unlikely and I’ll be more than happy to pick up more shares at the low $70′s if possible.

      Take care!

  11. Scott says

    I know its not part of your portfolio, but I have MET in my Roth IRA, and they just announced a 48% dividend increase. I know they can’t do that very often, but that sure put a smile on my face.

  12. says

    These dividend increases are great news! How much do these dividend increases raise your yearly dividend income? I’m sure it gets you a little bit closer to financial freedom which is awesome.

    • says

      Jake Erickson,

      By my calculations, the raises amounted to about $50 in extra annual dividend income. So that was like investing $1660 at a 3% entry yield! Works for me. :)

      The power of dividend growth investing at work…

      Best wishes!

    • says

      Ok i give up on trying to derive DM’s high quality dividend growth stock formula of reinvesting once he is retired at age 40…

      Year one after Early Retirement. A Portfolio of $500k @ 9% dividend payouts and growth dividends of 10%/yr – $15k in expenses per year, then all extra cash flows being reinvested in more dividend growing branches…will yield what after 40 years? (age 80) (including 20% dividend taxes once over $95,000 in dividend income)

      Any financial statistical calculus Dividend investor readers on this site that could help me out??

      The initial $500,000 portfolio at 9% and 10% annual dividend growth yields,
      $20,773,382.04 after yearly expenses of $15k including inflation on expenses.

      Let alone adding the dividend yields at 4% of every reinvested dividend branch plus 10% annual dividend growth on these yields over 40 years…

    • says

      Ok, i bunkered down and did the MATH.

      A simple 401k investment of a max contribution of $17,500 per year into a fund that yields 4% on average yearly, gives you $574,000 after 40 years.

      A simple dividend growth investment to a taxable account of $17,500 per year for buying shares of a high quality dividend growth company that grows it’s 4% dividend at 10% per year; gives you $3,127,962 after 40 years.

      This is because every year, even in 401k’s you are technically buying new fund units that pay a 4% average per year and don’t grow, some years they go up from this, some years they go negative in average returns. Just taking 4% as average.

      With DGI, your dividend payout in high quality stock companies grows that have a long history of paying otu, possibly reaches a your first year’s investment of $17,500′s dividend payout of 164.58% after 40 years.

      This doesn’t even include possible capital gains/losses over 40 years (or forever) of holding the stock.

      Dividend Growth Investing is truely a growing Tree model, with every new branch investment growing, compared with a growing stick model found in 401k’s, index funds, ETF’s, etc.

      Thank you DM for opening my eyes up over the last year!

    • says

      FYC,

      Glad you enjoy the dividend growth investing. In my opinion, it’s a phenomenal way to build long-term wealth, especially due to the fact that you don’t have to cut any branches off your tree. Just let the fruit collect until you need to pluck it!

      Best regards!

  13. Andy says

    DM, I’m new to all this and am still trying to get a handle on valuations and all that. One thing I wanted to ask you about is KMI since you seem to be so in favor of them. If they have annual dividends of $1.52 per share and their EPS is only $.78 per share, isn’t that a bit of a red flag? Doesn’t that effectively give them a payout ratio of greater than 100%? Do you factor EPS into your analysis at all and how would you reconcile these numbers?

    Thanks and I very much appreciate what you’re doing with this blog.

    • says

      Andy,

      KMI is a tough one because it has a different structure from most normal corporations. KMI’s value is, to a large degree, tied up in the units it owns in the underlying KMP and EPB partnerships (10% or so of the former and 40% or so of the latter), as well the Incentive Distribution Rights (IDR). So, profit is a bit skewed. I find the best way to value shares is to either do a DCF analysis or DDM analysis for future cash flows or dividends (both of which should be substantial).

      Best wishes!

  14. says

    DM-Thanks for your dedication to your site and I’m glad you got some national exposure. I wanted to know your thoughts on Safeway (SWY) Yield ~3%, 5 year DGR of 20% and a significant pullback following Q1 earnings. With a payout ratio of only 27% I see this as a great buying opportunity. Have you, or anyone that follows your blog, looked at this company?

    • says

      Luke Sutherland,

      Thanks for stopping by! I appreciate the kind words very much. :)

      As far as Safeway is concerned, I really cannot comment. I don’t follow it as a company and haven’t ever taken a real good look at it. I’m not a big fan of retail in general, but I do like WMT for its scale and international presence. I’ll have to take a look at SWY and get back to you. Sorry I couldn’t be of more assistance.

      Best regards.

    • says

      Mike,

      Nice buy there! I’m digging KMI right now, and it’s one of my best ideas right now. Although I’m already a little heavy on the name I may add more yet next month or shortly thereafter.

      Congrats.

      Best wishes!

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