The Impact Of Dividend Increases Through December Of 2018

Given another quarter-end had recently passed, I wanted to reflect on what occurred over the last full-year.  I do not mean just any old reflection, but I am going to be specifically talking about dividend increases and their impact on my portfolio this year.  Tax reform has been rewarding, as companies have been sending portions of the cost savings to their shareholders.

 

Person Touching Macbook Pro

Why dividend increases matter

Why does this matter?  Why would dividend increases matter to my investment journey?  The next section will describe the importance of dividend increases.  In short, the reason is the increase in cost of goods (food, energy, shelter, etc.), over a span of time.  This is what you hear, when, “inflation”, is discussed.

Why do dividends increasing in the future matter from companies that we own?  When the price of goods are increasing, don’t you want your income to continue to grow, in order to offset or “trump” the inflation?  Now, as the community knows, uninterrupted dividend increases are a quality we look for, prior to investing in a company.  We don’t solely invest for current income, but we are investing for a larger, future income too!  For example, Johnson & Johnson (JNJ) increased their dividend 7.15% back in April.  The 7.15% dividend increase outpaces the rate of inflation, which has been stated at 2.3% over the last year.  Does this start to make sense now?  Buying a dividend income stock, that increases their dividend every year, not only pays you a solid rate or income each year, but they also increase their dividend in a way that outpaces or should outpace the increase in costs/prices or “inflation” (see Our Top 5 Foundation Stocks for great dividend income stocks that have increased their dividend each year for 25+ years!).

Here is the other kicker that I wanted to mention.  Most of us are all working for employers and, if we are lucky, receive a raise from our employer or from our clients.  However, sometimes the raise doesn’t touch the rate of inflation or sometimes we don’t receive a raise, depending on performance of what we do, how the company or even how our clients are doing.  A dividend income stock that increases their dividend, each year, can also take care of that.  I have been lucky and blessed to have the ability to invest into dividend income companies, to say the least, and have seen a rampage of dividend increases this year, that far outpaced any raise that I received, that’s for sure.

1 2 3 4
View single page >> |

Disclaimer: I do not recommend any decision to the reader or any user, please consult your own research. Thank you.

How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.