The advantages of a dividend investor and especially of a dividend growth investor should be that the companies increase their dividends every year. This year I want to start tracking my dividend increases more carefully.
As you can see my portfolio consists of:
- some slow growers like all the utilities or ORI, which on the other side already offer a very good yield
- steady growers like Johnson & Johnson or Pepsi etv.
- fast growing stocks like CVS
My goal is to have an average annual dividend growth of 7.5% per year. Giving the mixture of my portfolio this is a very challenging goal, as I do not have that many fast growing companies in my portfolio. But as you can see in my recent stock valuation articles in the future I will definitely concentrate my investment decision more on the potential dividend growth.
So let’s have a look on the dividend increases in 2017
- BLK: Yearly dividend from 9.16 to 10.00 USD 9.17% Increase
- ED: Yearly dividend from 2.68 to 2.76 USD 2.99% Increase
- ADM: Yearly dividend from 1.20 to 1.28 USD 6.67% Increase
- PPL: Yearly dividend from 1.52 to 1.58 USD 3.95% Increase
- MUV: Yearly dividend from 8.25 to 8.60 EUR 4.24% Increase
Based on the numbers of shares I have of each company this makes an average dividend increase 4.85%, which is behind my goal of 7.5%. As I just have started to track this development I am already looking forward to seeing the other increases which will come up in the next 2 months. To avoid any misunderstandings, I only included the declared dividend increases in 2017 and only of those stocks I have bought before the increase was declared. That’s why CVS and VFC are missing in that list.
How much more income do I generate
This dividend increase means that I am generating 11.85 EUR more dividend income before tax and based on constant FX-Rate. If you look at this number, this does not look a lot but considering my current dividend yield before taxes of 3.96% it would mean an additional investment of 299.18 EUR. If I am looking at my current interest rate of my saving account of 0.30% I would need 3 950 EUR to generate an income of 11.85 EUR. So, after all the 11.85 EUR do not look that bad anymore.
What is your current dividend increase rate or are you actually tracking it?