One of the most common mistakes I see new investors make is to chase yield. They see an 8%, 9%, or 10% yield on a stock and, well, that’s all they look at. Business model? Bottom-line growth? Balance sheet strength? Pricing power? Valuation?

Nah. High yield. Well, a high yield looks great on paper. Until you see poor long-term investment performance. Also, a high yield doesn’t matter much over the long run if the dividend isn’t growing or, worse yet – if the dividend is being cut. You want to make sure you can keep up with inflation over the coming decades. And the best way to do that is to protect or even improve, your purchasing power is with regular increases in your passive income.

The first dividend increase I want to tell you about came from Duke Energy (DUK). Duke just increased their dividend by 2.1%. The utility company has now increased its dividend for 18 consecutive years.

The second dividend increase you should know about came from Computer Services (CSVI). Computer Services just increased their dividend by 8%. An 8% increase in passive income for doing absolutely nothing other than holding stock is always most welcome. I mean, how can you not be happy with something like that? Also, check this out. The dividend is up fourfold over the last 10 years. This company is able to hand out generous dividend increases because it’s growing like clockwork – EPS has compounded at an annual rate of nearly 10% over the last decade. This marks the 50th consecutive year of dividend increases for the technology solutions provider. It’s now a Dividend King. 50 years into dividend growth and they celebrate it with an 8% dividend increase. You’ve gotta love it. I frequently come across this misnomer from investors, especially new investors, who believe that decades into dividend growth will automatically trigger a dividend growth slowdown. But that’s not necessarily true at all. A lot of stocks out there are handing out big dividend increases, 20, 30, 40 years into dividend growth. A number of these companies are handing out some of their biggest dividend increases ever. This stock doesn’t look cheap, but it never does. It’s a thinly traded over-the-counter stock that flies way under the radar. Despite that, the valuation is always elevated. The five-year average P/E ratio is 22.5, so this is never what you might call a “cheap” stock. But with the P/E ratio now over 28, the valuation is richer than it usually is. That said, this company deserves a high multiple. It’s fundamentally excellent across the board, including no debt. I mean, the stock is up 200% over just the last five years. It’s been a phenomenal long-term investment. And it will likely continue to be one.

Last but not least, let’s talk about the dividend increase that came in from J.M. Smucker (SJM). J.M. Smucker just increased their dividend by 10%. Take that, inflation. A 10% “pay raise” for doing nothing other than just holding stock in a brokerage account. That’s so easy, even I can do that. I don’t know if I ever got a 10% pay raise at my old day job. But even if I did, I would have had to work extra hard to get it. Now, all I have to do is be a shareholder. Being an investor is the best and easiest job I’ve ever had. This is the 25th consecutive year of dividend increases for the food company.

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