Tuesday, December 3, 2019


Well, that was a fun month.  Great food.  Fun football games.  Tricked out the house for the Holidays

Got some dividend increases.

Yep, not only am I being paid for being alive, I got a pay raise for being alive...

Eight companies rewarded their shareholders with dividend increases, some by quite a big chunk to boot!  Dividends are simply a company sharing their profits with their co-owners.

The big one last month was Sysco Systems (SYY).  15.4% rise.

That's right.  Its a can of whoop-ass....

As you can see from the chart below, I averaged an 8.44% raise in the 8 companies that announced raises.

TICKER OLD DIV NEW DIV % Gain old annual new annual INCREASE Yield  Yield on Purchase
ABBV $1.070 $1.180 10.3% $171.20 $188.80 $17.60 5.93% 4.68%
EMR $0.490 $0.500 2% $66.64 $68.00 $1.36 2.74% 4.28%
WRK $0.4550 $0.465 2.2% $203.84 $208.32 $4.48 4.74% 5.22%
TSN $0.375 $0.420 12% $40.50 $45.36 $4.86 1.89% 2.81%
NKE $0.220 $0.245 11.4% $40.48 $45.08 $4.60 1.07% 1.14%
SYY $0.390 $0.450 15.4% $98.28 $113.40 $15.12 2.21% 2.84%
MRK $0.550 $0.610 10.9% $107.80 $119.56 $11.76 2.90% 3.02%
HRL $0.2325 $0.210 10.7% $37.00 $41.85 $4.85 2.18% 2.33%

$765.74 $830.37 $64.63 8.44%

You may notice my last column. "Yield on purchase".  That's what I am earning from these companies thanks to buying at a lower price in the past and experiencing a dividend raise or two.

For example, Westrock will pay you 4.74% annually if you buy today.  I get 5.22% from my purchase a few months ago. 

EMR is a good example of holding a company for a longer period of time and going through multiple div increases.  My money now earns 4.28%.

That's the snowball I am looking for.

Most of these companies will continue to raise their dividend annually for years to come.  Eventually, I will earn 100% of my initial investment annually.  Eventually...

You can see ABBV pays me less that if I had bought today.   That company has lost some ground since my purchase.  Even if the stock is a bit underwater, multiple div increases will keep my yield up to the current one.

A friend of mine who does not quite understand the dividend thing commented "why aren't they growing their company instead?  Dividends do not seem like a smart thing to do".   Well, what owner would never want to reap the rewards of a profitable company?

In fact, these companies are growing.  But there is a realistic limit to growth.  Unrestrained growth could, and often does, result in a free fall when sales do not match growth.  Smart companies grow in a measured pace and give the rest of their profits back to the shareholders that have entrusted this company to perform for them.


No comments:

Post a Comment

Please leave a comment. Just be respectful of each other. We're all here for the same reasons.... Thanks!