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. Dividend raises typically mean operations are doing well and management is confident enough about cash flows to give shareholders a raise. All in all, it’s a good sign.
I try to keep my eyes peeled for dividend raises from companies I’m invested in, as well as companies on my watch list. Some recent dividend increases include:
AT&T Inc. (T) recently gave shareholders a raise, increasing its quarterly dividend by 2.2%. The new payout represents a $0.01 increase, going from $0.45 per share quarterly to $0.46. The yield on the new payout rises to 5.43% based on today’s price. T has raised its dividend now for 30 straight years, which is a wonderful track record. However, the more recent record of raising the dividend by just 1 penny per year is a bit troublesome as eventually the growth rate will fall below inflation. T is one of my smaller positions, and I’m not particularly inclined right now to increase it. I love the yield, which supercharges my overall portfolio’s yield and dividend generation power, but the growth rate leaves something to be desired.
General Electric Company (GE) decided to raise its quarterly dividend payout by 15.8%, now paying out $0.22 per share over the old rate of $0.19 per share. The yield on GE shares rises to 3.28%. GE has now raised its dividend four straight years after the crushing dividend cut back in 2009 during the height of the Great Recession. I’m a fan of GE here. I think they’re making great moves by divesting GE Capital and returning cash to shareholders while simultaneously boosting core industrial businesses.
Toronto-Dominion Bank (TD) surprised shareholders with its third dividend raise just this year. By boosting the quarterly per share dividend to CAD $0.86 per share over the old rate of CAD $0.85, this represents just a 1.2% raise. However, with this being the third raise thus far in 2013, TD has raised its dividend by a cumulative 11.7% YOY. While TD has a short history after restarting dividend growth coming out of the Great Recession, the bank didn’t cut its dividend during the crisis like many other banks did. On top of the dividend raise, TD also announced a 2-for-1 stock split on its common stock. The yield on the U.S. shares after the raise is now 3.62% (after factoring in exchange rate on CAD).
MasterCard Inc. (MA) recently gave shareholders a massive dividend raise, increasing its quarterly dividend by a full 83.3%. The new per share rate of $1.10 is a huge bump from the old quarterly per share dividend of $0.60. The yield on shares is now 0.56%. This is the third year of dividend growth for the company. MA also recently announced a 10-for-1 stock split on its common stock. If that wasn’t enough, they also announced a new $3.5 billion share buyback program. Whew! Great news for shareholders here. Unfortunately, I’m not long MA. The high P/E and low relative yield has kept me away, but weakness in shares or a significant increase in earnings would allow my interest to rise accordingly.
The Walt Disney Company (DIS) recently increased its annual per share dividend by 14.7%, now paying out $0.86. This is a nice increase over the old payout of $0.75 per share. DIS is building a nice dividend growth record, now with the fourth annual dividend raise. The yield on shares after the raise is now 1.24%. While I like Disney’s product and service lineup, along with the loyalty customers tend to display, the annual dividend and low yield keep me at bay for now.
Own any of these companies? What’s your thoughts on these raises?
Full Disclosure: Long T, GE, TD
Thanks for reading.
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