Dividend increases are a wonderful thing and the main drive why we do dividend investing. The secret is to find the right balance of high yield stocks like AT&T (T) with a rather slow dividend increase per year and lower yield stocks like Cisco Systems (CSCO), which have a yearly increase rate of around 10%.

This year was kind of special when it came to dividend increases. On the one hand I saw huge increases from Altria Group (MO) or AbbVie (ABBV), on the other hand I also saw no dividend increases from General Mills (GIS) or Greene King. The good thing is, that I did not experienced any dividend cut this year. As I mentioned in my previous post, in the future I will look more into stocks with a higher increase potential, which of course do not have such a high yield.

So nevertheless the year ended with two expected dividend increases, which were rather small.

AT&T (T)

AT&T increased their dividend the 34th year in a row, from an yearly dividend of 2.00 USD to 2.04 USD. This is the typical increase of AT&T and I was not expecting more. Actually I am quite happy, that the increase was only 4 cent as I think they really should concentrate more on reducing their debt level.

With that increase T offers now an outstanding yield of 7.81%, which is really great for a company with such a long strike of dividend increases. In total that increase adds 3.49 EUR before tax to my annual dividend income.

Pfizer (PFE)

The second company was Pfizer, also a company with a long dividend history. Unfortunately they cut their dividend 8 years ago, but have increased it since then every year. This years’ increase was 5.88% to now an annual dividend of 1.44 USD. It seems that their dividend increase policy sticks to the plan of increasing the dividend by 8 cents per year.

PFE now offers a yield of 3.43%, which is not so bad for the health sector. In total that increase adds 2.94 EUR before tax to my annual dividend income.

In total the increases do not have a huge impact on my annual dividend income, but I was not expecting it either and honestly an increase is better than now increase.

To sum up the year has been anyways very successful, when it comes to dividend increases. In total I could boost my annual dividend income by around 120 EUR, simple through companies which increased their dividends. My average rate was at 8.56%, which is above my goal to create an average rate of 7.5%.

Conclusion and Outlook

Dividend increases are an important factor for our dividend income, so for the next ten years it is my goal to have an average annual rate of at least 7.5%. Last year I missed that goal as the rate was just around 5%. Just to show you how effective and important dividend increases are; my current projected annual dividend income is at 2 027.59 EUR after tax, with an average rate of 7.5%, my dividend income in 10 years would be 4 178.93 EUR, so more than double of what I have now, and this income does not even include my investments I will do in the next 10 years. So as you can see dividend increases are a really important part to boost your income.

I know it will be difficult to maintain such a high rate through the next 10 years, but that’s why I am now focusing more on dividend stocks with a higher growth potential.

It is just a long term game and you need patience so keep on investing guys!!