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 dividend raises. A dividend raise typically means operations are doing well, and management is confident enough about cash flow to give shareholders more money. All in all, it’s a very good sign.
In addition, dividend raises from companies I own a stake in means my personal dividend income is increasing, thereby speeding the effects of compounding since I’ll be able to reinvest larger dividend payouts back into dividend growth stocks that are also regularly paying and raising dividends. It’s a truly wonderful cycle. And it just brings me that much closer to financial independence.
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:
Target Corporation (TGT) recently announced a huge dividend raise, boosting its payout by 20.9%. The new quarterly per share dividend of $0.52 is a nine cent increase over the old payout of $0.43. This is a welcome relief, as shareholders have been on a bumpy ride over the last year. This troubled retailer has been rocked by a massive data breach and a Canadian expansion effort that hasn’t panned out as expected. However, changes in management and this recent raise gives me confidence as a partial owner in the company that Target takes its shareholders seriously, and is anxious to right the ship. With this raise in the books, Target has now boosted dividends for 47 consecutive years. The yield on shares is now 3.63%. If I wasn’t already heavily invested in Target, I would be buying shares at today’s price.
Helmerich & Payne, Inc. (HP) just boosted its dividend for the 43rd consecutive year in a row, upping its quarterly per share dividend by 10% – now paying out $0.6875 per share over the old payout of $0.625. HP has been aggressively increasing its dividend over the last few years, and as such has come into the radar of dividend growth investors like me as its yield on shares has risen. Historically speaking, HP’s shares have often yielded less than 1%. But with a yield on shares that currently stands at 2.43% and a very lengthy dividend growth streak, this contract driller deserves a little more attention.
Caterpillar, Inc. (CAT) gave shareholders a nice raise, recently increasing its dividend by 16.7%. The new payout of $0.70 per quarter per share takes precedent over the old rate of $0.60. This is now the 21st consecutive year in which Caterpillar has increased its dividend payout. I took a good look at CAT last summer when it was priced at just over $80 per share, and it’s been on a heck of a run since then. I passed because I was concerned about the cyclical nature of its business, high capital expenditures, and competition. But perhaps I made an incorrect read there as management has a very optimistic view of the business and the underlying operations seem to support that view. Of course, I tend to stick to companies that experience more secular growth so I don’t feel too bad about missing out on this particular opportunity. The yield on shares is now 2.62%, which is fairly solid for this industrial giant.
FedEx Corporation (FDX) recently increased its quarterly per share dividend from $0.15 to $0.20. This represents a 33.3% increase in the payout, which is fantastic. Unfortunately, the yield on FedEx shares at just 0.57% is too low for me to get very excited about. While I’m occasionally willing to invest in a company with a yield below 1%, the dividend growth has to be especially high to compensate for the low starting income. And with a 10-year dividend growth rate of just 10.7%, FedEx doesn’t make the cut for me here. However, that could change in the future more raises in line with this one. FedEx now has 13 years of consecutive annual raises under its belt.
Full Disclosure: Long TGT.
Are you a shareholder in any of the companies listed above? A fan of these recent increases?
Thanks for reading.
- High Yield Dividend Stocks in Gurus' Portfolio
- Top dividend stocks of Warren Buffett
- Top dividend stocks of George Soros