The Power Of Dividends

As you can see, dividend payers went on to meaningfully outperform non-payers. However, from 1930 through 2017 dividends accounted for about 42% of the S&P 500 Index’s total return, according to the Hartford Funds. Track Your Dividends makes it easy to track all your Canadian and US dividend income all in one easy to use interface.

  • Please reference the performance of Dividend Cutters discussed previously.
  • Reinvesting dividends, particularly those paid by companies with a history of increasing their dividend over time, can be a powerful avenue to increasing total wealth over time.
  • Securities in this report are not FDIC-insured, may lose value, and are not guaranteed by a bank or other financial institution.
  • Analysts expect SWK to generate average annual earnings growth of more than 9% a year over the next half-decade, thanks to a strategy of growth through acquisitions and cost cuts.
  • The Dow component has increased its dividend for 37 consecutive years, and has done so at an average annual rate of 6.2%.
  • In some cases, but not all, the sponsoring company may give a discount to the share price on these purchases.

Generous military spending has helped fuel this dividend stock’s steady stream of cash returned to shareholders. In one of the most recent big deals, in December 2020 the company was awarded a $4.6 billion U.S. Defense contractor General Dynamics (GD, $162.14) is one of the newer members of the Dividend Aristocrats, having been added to the elite list of forex best dividend stocks for growth in 2017. Praxair raised its dividend for 25 consecutive years before its merger, and the combined company continues to be a steady dividend payer. Prior to the merger, Linde, now headquartered in Dublin, raised its dividend every year since 2014. Linde’s most recent hike came in January – a 10% bump to $1.06 per share.


In other words, as a dividend growth investor, the dividends that you accrue are tangible and permanent benefits that no crash can undo. The first argument for being a dividend growth investor is simply the historical importance of dividends to a portfolio’s total return. Most investors alive today have mostly known a stock market in which share price appreciation was the underlying goal. If our portfolio has an average dividend yield of 3%, we would need close to $400,000 to generate $12,000 in annual dividend income.

the dividend investor

By choosing to pay dividends, management is essentially conceding that profits from operations are better off being distributed to the shareholders than being put back into the company. In other words, management feels that reinvesting profits to achieve further growth will not offer the shareholder as high a return as a distribution in the form of dividends. Investors seeking dividend investments have a number of options including stocks, mutual funds, exchange-traded funds , and more. Thedividend discount model or the Gordon growth model can be helpful in choosing stock investments. These techniques rely on anticipated future dividend streams to value shares.

Fixed Income

Marsh & McLennan Companies hiked its quarterly dividend by 15.10% to 53.50 cents/share. This marked the 12th consecutive year of annual dividend increases for this dividend achiever. Over the past decade, the company managed to grow dividends at an annualized rate of 8.60%/year. Walgreens Boots Alliance hiked its quarterly dividend by 2.1 percent to 47.75 cents/share. This marked the 46th consecutive annual dividend increase for this dividend aristocrat. Over the past decade, it has managed to increase dividends by 11.50%/year. The company is a dividend aristocrat with a 49 year track record of consecutive annual dividend increases.

the dividend investor

For example, a bond-investing fund may pay monthly dividends as it receives money in the form of monthly interest on its interest-bearing holdings. The fund is merely transferring the income from the interest fully or partially to the fund investors. Its dividends may come from the dividend it receives from the stocks held in its portfolio, or by selling a certain quantity of stocks. It’s likely the investors receiving the dividend from the fund are reducing their holding value, which gets reflected in the reduced NAV on the ex-dividend date. Dividends can be expected by the shareholders as a reward for their trust in a company. The company management may aim to honor this sentiment by delivering a robust track record of dividend payments. Dividend payments reflect positively on a company and help maintain investors’ trust.

Air Products & Chemicals

Perhaps the biggest reason most people invest is to ensure a good standard of living in retirement. For example, many people are familiar with the 4% drawdown rule, which says that you should sell 4% of your portfolio during retirement to live off. Simply put, a commitment to paying dividends places more discipline on management teams to invest in their highest-returning, most promising projects. If the stock was richly valued, reflecting the company’s above-average growth prospects, the occurrence of any of these factors can result in very poor shareholder returns. More importantly, these businesses can struggle to find profitable, needle-moving growth opportunities. However, non-dividend paying stocks focused on growth can also run into a number of unexpected challenges.

the dividend investor

Most recently, in June 2020, MDT lifted its quarterly payout by 7.4% to 58 cents a share. Its dividend per share has grown by 50% over the past half-decade and has grown at a 17% compounded annual growth rate over the past 43 years, Medtronic says. AT&T has raised its difference between bear and bull market dividend on an annual basis for 36 consecutive years, and typically boasts one of the highest yields in the S&P 500. That’s in large part because of the cash flows generated by the telecom business, which enjoys what some call an effective duopoly with rival Verizon .

Sure Dividends Premium Services

The company’s board of directors decides what percentage of earnings will be paid out to shareholders, and then puts the remaining profits back into the company. Although dividends are usually dispersed quarterly, it is important to remember that the company is not obligated to pay a dividend every single quarter. In fact, the company can stop paying a dividend at any time, but this is rare—especially for a firm with a long history of dividend payments.

For example, a company that is trading at $60 per share declares a $2 dividend on the announcement date. As soon as the news becomes public, forex trade the share price shoots up by around $2 and hit $62. Say the stock trades at $63 one business day prior to the ex-dividend date.

Living Off Dividends In Retirement

The regular payout to shareholders dates back more than a century, to 1895, and has increased annually for 58 years. CL last raised its quarterly payment in March 2020, when it added 2.3% to 44 cents a share. The Street, which has a consensus Buy recommendation in shares, expects ABBV to generate average annual revenue growth of 4.9% over the next three to five years. Analysts polled by S&P Global Market Intelligence expect KMB earnings to grow at an average annual rate of just 2.6% over the next three to five years. Pandemic-related weakness in its K-C Professional segment – which services office buildings, public restrooms and the like – and a strong dollar are largely to blame.

Companies Cant Fake Dividends

Dividends are generally considered a sign of good financial health, both for you as the investor and for the company you are invested in. BDX’s last hike was a 5.1% uptick to 83 cents a share, announced in November 2020. Its annual dividend growth streak is nearing five decades – a track record that should offer peace of mind to antsy income investors. Analysts forex expect PEP to generate average annual earnings growth of 6.8% over the next three to five years. And that, in turn, should help PepsiCo continue its dividend growth streak, which reached 48 years thanks to a 7% hike to $1.0225 per share announced in November 2020. Their consensus recommendation stands at Hold, which includes a total of six Sell calls.

A dividend is a token reward paid to the shareholders for their investment in a company’s equity, and it usually originates from the company’s net profits. At times, companies may still make dividend payments even when they don’t make suitable profits. They may do so to maintain their established track record of making regular dividend payments. Duke Energy Corporation hiked quarterly dividends by 2.1 percent to 98.50 cents/share. This marked the 17th year of consecutive annual dividend increases for this dividend achiever.

Dividend Payback Matrix

The funds and other products referred to on this Site may be offered and sold only to persons in the United States and its territories. 4 Beta is a measure of risk that indicates the price forex trading strategies sensitivity of a security or a portfolio relative to a specified market index. 1 S&P 500 Index is a market capitalization-weighted price index composed of 500 widely held common stocks.

Although the pandemic pressured sales for much of last year, particularly in China, the company bounced back in a big way in the fourth quarter. Revenue jumped 11% to a record $834.5 million, primarily due to higher residential water heater volumes in North America and higher sales in China. Albemarle (ALB, $158.69), which manufactures specialty chemicals such as lithium is slated to raise its dividend again soon. It’s most recent hike came in February 2020 with a 5% increase to 38.5 cents per share.

Comments are closed.