Tuesday, September 29, 2020

Expected Dividend Increases for October 2020

At the time of my writing this blog post, the third quarter of 2020 is fast approaching its end, which leaves us with only one quarter to work toward crushing our goals for this year. The speed with which this year is passing us by never ceases to amaze me!

With that aside, I'll be discussing the dividend increases that I received during the month of September (spoiler: I was fortunate enough not to endure any dividend cuts during the month of September), and I'll be looking ahead to expected dividend increases for the month of October.

Actual Dividend Increases for September:

Dividend Increase #1: Realty Income (O)

Starting off with arguably the most consistent dividend payer in my portfolio, Realty Income (O) once again met my expectation of a 0.2% increase in its monthly dividend as I outlined in my previous post of this series, with O increasing its monthly dividend from $0.2335/share to $0.2340/share.

O's dividend announcement resulted in a $0.042 increase in my annual forward dividends across my 7 shares of the stock.

Dividend Increase #2: W.P. Carey (WPC)

Moving to yet another incredibly consistent REIT within my portfolio, W.P. Carey (WPC) announced a 0.2% increase in its quarterly dividend $1.042/share to $1.044/share, which was once again in line with my expectations.

This one-two punch of O and WPC has never failed to impress me with steady dividend increases since I initiated my positions in early 2018.

WPC's dividend announcement helped to pad my annual forward dividends by $0.04 across my 5 shares of the stock.

Dividend Increase #3: STORE Capital (STOR)

Staying on the theme of high-quality REITs, STORE Capital (STOR) is my newest holding of the three REITs highlighted in this section of the post, with my position dating back to March of this year when I went on my buying spree as the financial markets were tanking.

Because I haven't owned STOR for much longer than 6 months, I blanked on the dividend increase that was scheduled for September.

In light of the significant disruptions of COVID-19 to just about every sector of the economy, I was very pleased with STOR's 2.9% increase in its quarterly dividend from $0.35/share to $0.36/share.

Across my 17 shares of STOR, my annual forward dividends were boosted by $0.68.

Dividend Increase #4: Philip Morris International (PM)

Moving to the tobacco industry, Philip Morris International (PM) also managed to meet my expectations, raising its quarterly dividend 2.6% from $1.17/share to $1.20/share.

Across my 9 shares of PM, my annual forward dividends surged $1.08 as a result of PM's dividend increase.

Dividend Increase #5: Lockheed Martin (LMT)

Still sticking with the theme of consistency, Lockheed Martin (LMT) managed to meet my expectations with its announcement that it was increasing its quarterly dividend 8.3% from $2.40/share to $2.60/share.

LMT's dividend announcement resulted in a $0.80 boost to my annual forward dividends across my single share of the stock.

Dividend Increase #6: General Mills (GIS)

After not having raised its dividend since June 2017 following its $8 billion acquisition of Blue Buffalo, General Mills (GIS) recently reported 9% YoY growth in its revenue and $1.00/share in adjusted earnings versus $0.87/share analyst expectations for its first quarter, which prompted the company to announce a 4.1% increase to its quarterly dividend from $0.49/share to $0.51/share.

I had gotten so used to GIS not raising its dividend, that I had failed to consider that the company would eventually be increasing its dividend, so I was pleasantly surprised by the news last week.

Across my 4 shares of the stock, my annual forward dividends were boosted by $0.32.

Expected Dividend Increases for October:

Expected Dividend Increase #1: Visa (V)

As a result of owning shares of Visa (V) less than a year, I mistakenly assumed that V would be announcing its dividend increase in September, but a few weeks ago, I realized that V has historically announced dividend increases in late October.

I would reiterate the following that I outlined in my previous post of this series as it pertains to V:

"Despite a difficult year for Visa (V) amid reduced consumer spending due to travel restrictions and the closure of many across the world, I remain confident that V will deliver a dividend in the weeks ahead.

While I don't envision a teens or twenty percent plus dividend increase being announced as I believe V's management team and Board of Directors will be conservative in their dividend announcement, I am forecasting a 10.0% increase in the quarterly dividend from $0.30/share to $0.33/share.

Across my 2 shares of V, I am forecasting a $0.24 boost in my annual forward dividends."

Expected Dividend Increase #2: Iron Mountain (IRM)

Given that Iron Mountain (IRM) is focused on reducing its AFFO payout ratio from its current mid-70% range to the high-60% range to bring the AFFO payout ratio in line with its data center REIT peers, I expect that dividend growth will significantly lag AFFO growth over the next 2-3 years.

As a result, I am forecasting that IRM will announce a 1.1% increase in its quarterly dividend from $0.6185/share to $0.6250/share.

If my prediction proves to be correct, IRM's dividend increase would result in a $0.208 padding to my annual forward dividends across my 8 shares of the stock.

Concluding Thoughts:

Across the board, this month was the strongest month in terms of dividend increases since earlier this year in February, when dividend announcements during the month boosted my annual forward dividends by $3.00.

My annual forward dividends managed to increase $2.962 as a result of the dividend announcements in September, which would require an investment of $74.05 to replicate, assuming a 4% yield.

This development suggests that the worst is behind my portfolio and I fully expect my annual forward dividends to grow each and every month to close out this year, especially as I am less than 6 weeks away from being able to fully shift my focus from paying off debt back to dividend growth investing.


How was your month along the lines of dividend announcements?

Did you benefit from any first time dividend increases as I did with STOR and LMT this month?

Thanks very much for your readership and I look forward to reading and replying to your comments in the comment section below!

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