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:

ConocoPhillips (COP) raised its dividend today by 4.5%. The new quarterly dividend of $0.69 per share will be payable September 3rd, which is a nice bump up from the old rate of $0.66 per share quarterly. There was some chatter about Conoco and whether they would raise the dividend this year. I was never really worried. Although they didn’t implicitly raise the dividend of COP shares during the year of 2012, shareholders of COP before the spin-off of the downstream operations in Phillips 66 (PSX) got a huge raise through the newly initiated company and it’s own dividend.  COP has been an absolutely wonderful investment for me so far, and really one of the best investments I’ve ever made. In hindsight, the only mistake I made was not buying more COP before the spin-off of PSX. As always, hindsight is 20/20!

Walgreen Company (WAG) yesterday raised its quarterly dividend by 14.5%! The old dividend was $0.275 per quarter per share and the new quarterly per share dividend is $0.315. I really missed the boat on WAG. Shares were trading for ~$30 last summer and I knew deep down inside it was a great opportunity and I let it pass me by for a number of reasons. I regret that now. Shares are now way too expensive for me, but if they dip anywhere near last summer’s levels again I’d be extremely interested in adding a piece of this retailer/pharmacy to my portfolio.

Cummins Inc. (CMI) recently raised its dividend by a full 25%! The old rate of $0.50 per share quarterly has been superseded by the new rate of $0.625. A fantastic raise. I think CMI is attractively valued here, and there could be big growth ahead with this company as natural gas engines take hold. We’ll see how it goes, but the core business of CMI is very strong. I’d like to have CMI in my portfolio, but the yield is just a tad low for my tastes currently.

Paychex, Inc. (PAYX) raised its quarterly dividend by 6.1% recently, paying out a new dividend of $0.35 per share quarterly over the old rate of $0.33. This new dividend is payable on August 15, 2013, with an ex-dividend date of July 30. PAYX has a spotty dividend growth history, and shares are way too expensive for me right now. It was a nice raise, but overall PAYX does not interest me at today’s prices.

What do you think? Enjoying these raises? Own a piece of any of these companies?

Full Disclosure: Long COP, PSX

Thanks for reading.

 Photo Credit: FreeDigitalPhotos.net

Edit: Corrected Disclosure

Comments

  1. says

    I picked up some WAG on weakness during their dispute with Express Scripts. Shortly afterward they resolved that dispute and the price recovered.

    I think moments like these are the best times to pick up blue chip names. A downturn on short-term news is an opportunity for the long-term investor.

    • says

      Executioner,

      Sorry, your comment went to my spam folder for some reason. My apologies.

      I agree with you completely. Short-term turmoil that doesn’t impact long-term business operations is typically a most wonderful time to pick up shares in high quality businesses at depressed levels.

      It wasn’t the dispute with Express Scripts that kept me from buying WAG. Rather, that whole debacle was during a time I was taking a short time from blogging/investing/frugal living and also coincided with a particularly slow summer at work, and so I had much less capital than usual. If this break would have never existed I likely would have purchased shares in WAG.

      Great job with the purchase. I’m sure you’ll be reaping the rewards of that decision for many years to come! :)

      Best wishes!

  2. says

    I’m very pleased with COP since I own it and was starting to get a bit worried. It has been over 14 months since the spinoff (wow time goes by fast!).

    I also passed on WAG last summer which I regret!

    I don’t think I’ve ever experienced a massive 25% passive income stream boost like CMI shareholders are enjoying. Congrats to owners of that business.

    Not really interested in PAYX either.

    I’m also hoping to receive a raise from Intel before the end of the month.

    Cheers!

    • says

      Compounding Income,

      I’m also pretty pleased with COP. The yield is very nice, and the fact that they’re still rewarding shareholders after the big spin-off is very nice. If I can get a 4%+ yield and 5-6% raises henceforth I’ll be happy.

      CMI had a very healthy dividend boost. Their recent dividend growth over the last few years has been very impressive.

      I also expect a nice little raise from Intel before the month lets out. I hope we see something just a tad healthier than last year. We’ll see what happens!

      Best wishes.

    • says

      Dtmheat,

      Great buy there! I really wished I would have pounced on WAG at the time but I was held back by the fact that I was taking a break from investing/frugal living during that time (last summer) and I was also low on capital from a slow summer at work.

      Definitely a great raise!

      Best regards.

  3. Spoonman says

    Those are some excellent increases all around. I share CI’s regret of not jumping on WAG when it took a beating (you’re probably gonna hear a lot of that =) ). I was busy allocating money in other positions and before long it got away from me.

    It’s great to see COP increase it’s dividend, it had a lot of people nervous but I knew they would come through.

    In any case, it’s fantastic to see these increases because it feels like someone else is adding capital to your account =).

    • says

      Spoonman,

      Yeah, I’m completely with you on WAG. I didn’t buy it not for lack of clear thought and intent, but rather for lack of capital. Unfortunate. :(

      It’s most wonderful to get a raise from a great company, and when you’re getting dozens of raises per year it’s even better. Even though COP’s dividend raise wasn’t as big as some others, it’s still much larger than most people get at their day jobs that they spend so much time and life energy at!

      Take care!

    • Debbie M says

      I’m totally with you on the size of the dividend raises. I typically got 3%–if there were any raises at all. It’s amazing that dividend raises can be so much bigger.

  4. says

    Thanks, DM! When a company like Cummins raises a dividend by that much, can I expect that to be a sustained increase? It looks like they’ve been pretty constant in their quarterly payouts to this point.

    I don’t own shares in any of the companies above, but would be happy to one day. Still getting started with dividend investing. Have a good weekend!

    • says

      G.B.,

      Thanks for stopping by.

      Well, with a company like Cummins I don’t expect dividend raises to be this hefty indefinitely. The 5-year dividend growth rate is over 30%, which is obviously phenomenal. But that won’t continue forever. However, one doesn’t need to in order to receive satisfactory returns. If I can get a combined yield + dividend growth rate to equal over 10 I’m happy. These two numbers combined should approximate your total return. So, with CMI I’d only need to see dividend growth in the 8% range or so to be happy.

      Best of luck as you start your own dividend investing journey! :)

      Take care.

    • says

      MFIJ,

      I agree. COP is a completely different company than it was just over a year ago. It no longer has downstream operations and they’re also changing the nature of their upstream assets, aiming for more domestic and high quality holdings.

      I’m with you on WAG. A real shame to let that one pass me by.

      Best regards!

  5. says

    I own COP, CMI and WAG so this was a great week for me. I picked up WAG in the mid-$30s and I wish I had jumped on it when the price really tanked after the Express Scripts mess. I think shares traded up to a 4% yield. Now after that increase you’d be sitting very pretty. There’s not a lot of chances to get 4% yields that can grow 10%+ for a sustained period.

    I was beginning to get worried about COP because it’s been quite a long time since the last increase. I was willing to give them longer than normal since they did the PSX spinoff but as it drags on it’s only natural to start to worry. I think it was Tim’s article though about COP’s dividend history and that did put my mind at ease. I’m okay with dividend freezes from COP since they have a history of doing so and then ramping it up in better times. After the spinoff it’s been kind of a rough time since COP had to sell off some assets but I expected the DG to return and yesterday’s announcement was quite nice.

    • says

      Pursuit,

      Great week, indeed! Very nice. You got WAG at a great price.

      I wasn’t very concerned about COP. The company is much, much different than it was at the beginning of 2012 and so I was very willing to give it time to adapt. Not only did they spin-off the downstream businesses but they’re rapidly changing the upstream businesses as well. It’s my hope that COP remains one of the top E&P companies in the world.

      Best wishes!

  6. Debbie M says

    I own some COP but sold my PSX, so I’m extra glad to see this raise. By itself, it raises my average monthly dividend by 0.56%, which is fun to see mid-year, since most raises come near the end of the year.

    • says

      Debbie M,

      I haven’t sold PSX yet. I think the downstream operations remain strong, so we’ll see. I like having COP and PSX because I’d usually rather companies remain one rather than split. Certainly from a total return perspective this split worked very well for shareholders, however.

      Gotta love raises though! :)

      Best regards.

    • Debbie M says

      I also would have preferred that they remain one company–but I am not in charge, for some reason. :-)

      In the end, I decided that COP still fit my requirements (though not as well), but PSX didn’t.

  7. says

    do you use a specific site or news feed or something to learn of all these dividend increases? or do you just learn about it as you do your normal research on stocks

    • says

      Took2Summit,

      I’m ashamed to admit that I spend way too much time tracking the companies I own, as well as those on my watch list. I keep fairly abreast of any news, including dividend raises so I’m usually aware of the raises when they happen.

      However, Seeking Alpha and Google both allow you to set up a portfolio tracker and they send news whenever those companies announce changes.

      I hope that helps!

      Best wishes.

    • says

      Jake,

      Dividend raises are definitely wonderful. Although they’re just pennies on their own, they do add up over time. Dividend increases are a big element of the ‘hypercompounding’ factor that dividend growth investing allows. You not only have the reinvested dividends to compound growth through more ownership of the companies paying out those dividends, but then the payouts themselves increase. It’s really amazing! :)

      I get kind of excited over this stuff. I guess I’m easily entertained! :)

      Take care.

  8. says

    I’m extremely pleased with the WAG raise. I made it my second largest holding back when they were having the dispute with Express Scripts so I got a great price. I just wish I would have had the courage to grab even more shares at the time. But we have to manage risk and it always could have turned out differently.

    I’m also pleased to see Conoco raise their rate. Like you I wasn’t concerned because I also considered the PSX spinoff and subsequent dividend paid as an increase. I look at it as COP spun off a portion of their company and therefore will be bringing in less earnings (since they won’t have the earnings anymore from the PSX division). But yet people were expecting a now smaller company to raise their dividend as if they never spun off part of their business and were still earning all profits. I was just glad they didn’t cut the dividend when they spun off part of their business. And now they are even increasing it! Great company.

    • says

      Dan,

      Great move with Walgreen’s. Picking it up during the Express Scripts dispute was a great move. Solid retailer with a great growth history and one that should be formidable over the next 10+ years or more.

      I’m with you on COP. I was glad to see them continue to reward shareholders even though they’re going through these massive changes. Speaks to their resolve and bodes well for the future. I also am a bit confused by some that expected them to behave as if they were a fully integrated supermajor when they clearly are not any longer. I like to own both COP and PSX, so that way I get both pieces of the old business. Best of both worlds! :)

      Best wishes!

    • says

      Captain,

      Great point there. I should have probably included CAT as I was looking at them not long ago, right after the 15% raise. Shares have had a nice little pop since then. I thought CAT shares were cheap at $82 or so, but I didn’t like some of the risks.

      Best regards.

  9. says

    I was also pleased with the COP raise. They already have a nice starting dividend and I’d be happy with a 4.5% raise each year.

    I was one of the lucky ones that picked up WAG on the cheap. I bought shares at $28.99/share! The only problem now is that I will have a hard time adding more shares at these prices.

    I’m really going to look into CMI. It was already on my short list but with the new raise it’s really tempting. I think the natural gas boom we’re experiencing will have big impacts on a lot of companies including CMI. It’s just a matter of time before a lot of trucks are switching over to natural gas especially with the cheap prices we’re seeing. The starting yield is low but they only need to raise the dividend 25% for 3 years in order for the payout to double.

    • says

      AAI,

      Great job on the purchase of Walgreen’s shares! You got a great price there. I can’t imagine a situation where you’re unhappy with the long-term returns on that.

      I’m with you on CMI. Looks fairly compelling here. The growth has been particularly impressive, although I must say I haven’t followed the company as closely as others on my watch list. I’ll have to take a good look at it at some point in the near future.

      Keep up the great work!

      Best wishes.

  10. Anonymous says

    I’m also very pleased with the COP raise. I’ve owned COP for a couple years now, and with the PSX split-off and subsequent dividend raises by PSX (and now by COP) it has been fantastic for me. Wish I had bought even more! :)
    -Chicago81

    • says

      Chicago81,

      I’m with you. I also wish I would have bought more COP. I held off only because at the time my portfolio was very energy heavy before the spin-off. My portfolio was much smaller and more concentrated at the time and I was interested in diversifying further. So many companies, so little capital! :(

      Hope all is well!

      Best regards.

  11. Anonymous says

    I bought cop right after the split at $55 and some pennies. I also missed out on wag but it was only because I was buying something else. I have been building capital to make my next purchase but having a hard time finding a good value. Since it is a large amount of capital(soon 50k) I need to be selective. Im begging for a market correction because this cash is burning a hole in my pocket. I need to start purchasing smaller amounts on a consistent basis.

    • says

      Anonymous,

      Nice purchase of ConocoPhillips shares. I’m sure you’ll be happy with your ownership stake in that high quality company over the long haul.

      You have a lot more capital than I do! :)

      It’s tough right now. Unless we get a significant drop from the levels we’re at now I won’t make another purchase this month. I’m not particularly excited about investing any fresh capital at these levels, so we’ll see what the rest of the year brings us. I hope to see at least a 5% broader market pullback from here as a start.

      Happy shopping! :)

      Take care.

  12. gibor says

    DM, I also own COP and glad that they increased dividends, I added more shares of COP not long before spin-off … should’ve been buy more :)
    I almost bought CAT last months, had limit buy order about $82 or so, but it didn’t get executed….bought instead SO at $43…
    I still hold PSX , it had a nice run than pull back quite a bit…. hope that they gonna have nice dividend increase beginning of next year

    • says

      gibor,

      I’m with you. I thought about buying more COP before the split, and I wish I would have. Coulda, woulda, shoulda.

      I like the buy of SO. The more I look at that one, the more I like it. Nice yield, decent growth. I’m light on utilities, so I may look to pick some SO up soon.

      I like PSX long-term. The new MLP spin-off should fuel plenty of growth in the future!

      Best regards.

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