4 Dividend Increases You Need to Know About!

one of the key components of dividend investing that a lot of people Overlook is investing in the stocks that are constantly increasing the amount they pay out in dividends for example my current expected yearly dividend income is sitting at $534 for the sake of easy numbers let's say it's $5,000 if the average dividend growth rate of all the Holdings in my portfolio is sitting at 10% that means my portfolio would add $500 of expected yearly dividend income simply from the Holdings in my portfolio increasing their dividend payouts and if they do that every single year while I'm reinvesting dividends and adding New Capital we get the dividend Snowball Effect so obviously dividend growth is extremely important so in this video we're going to be looking at four different stocks that just recently announced dividend increases and like always if youd like to be able to download any of my spreadsheets and also get access to the ticker data add-on that allows you to automatically import stock Financial straight into your spreadsheet then you can head over to Ticker dat.com at the link in the description so let's go ahead and jump into it our first stock that just recently announced a dividend increase is a dividend King and that is Johnson Johnson they saw a dividend increase of around 4% all the way up to $124 per share now if we go ahead and jump over to the dividend breakdown spreadsheets come up here plug in J and J and hit enter and you can see all this data is going to automatically load in now the starting dividend yield for this company is currently sitting quite a bit higher than it has historically we can see that starting yield sitting at 3.32% now why is this yield so much higher than normal well we can see Johnson and Johnson right now trading $149.25 which is pretty close to the lower end of their 52e range we can see over the past year down around 8.35% and you're to date down around 4.77% so going down in the share price does give them a higher starting dividend yield now if we look at the early dividend payouts again this is a company that's a dividend King they've been increasing dividend PS for over 50 consecutive years and in 2013 they were paying out $259 2023 it jumped all the way up to $4.70 and with their most recent dividend hike now sitting at $44.96 so pretty good history of increasing dividend payouts and it looks like the payout ratios are in a pretty healthy range as well we can see payout ratio as of a result of earnings at 33.4 eight in the free cash all payout ratio 64.5 now one thing we do have to point out that free cash payout ratio has been increasing slightly over the past couple of years which is really not something you want to see as an investor that means more and more of the company's free cash flow is being used to pay out dividends and ideally they're not having to use a lot of free cash flow to pay out dividends typically we want to see companies with lower free cash flow payout ratios so they have plenty of capital to do things like either buy back shares pay down debt or definitely reinvest back into the business now why is this free casual payout ratio slightly increasing over time well obviously they are increasing their dividend payments as we can see down here dividends paid out in total 2013 7.28 million 2023 11.7 million so those dividend payments again like we already know are increasing but the free cash flow has not been increasing at a rate as fast as the dividend payments look at the 10e free cash flow kager sitting at 2.82 in the 10year dividend kager sitting at about 6% which is pretty decent but it's not backed by enough free cash flow growth that's one of the concerns I have for this company do they have enough new products in their pipeline to increase their free cash flow so over the next decade they can continue to increase their dividend payouts at a rate at around 6% just like they have over the past 10 years that's the big question we need to know about this company our next company that just announced a dividend hike is going to be a popular one and that is Apple and they just announced a 4.2% increase to their dividend payment high can get to around 25 cents per share we're actually going to come back and talk about this stock buyback here in just a moment but let's look at them from a dividend perspective let's go ahead and come up here and plug in AAP and hit enter and now again this data will automatically load in thanks to Ticker data now the first thing I notice when I look at Apple is look at these yearly dividend payouts it looks like they decrease over time well this is actually because the company has had some stock splits but with a new ticker data update this is actually something we can account for we're just going to come up here and change this from yearly dividend payout to adjusted dividend and now we can see our quarterly dividend pays for Apple over the past decade and like you would expect they've been increasing every single year and with that most recent dividend hike it's now at 25 cents per share putting their yearly dividend payout at $1 now the starting yield for this company is very low sitting at 0.55% this is a very low yielding company but the payout ratios are very low as well payout ratio with earnings 15.49 and free cash flow payout ratio sitting at just 15% and this is a payout ratio that's actually been decreasing so come over here and look at this we can see in 2013 free casual payout ratio was sitting at about 23.6 69 and from 2013 to around it looks like 2019 for the most part it was in that 20% range but look because our free cash flow has been growing so rapidly over the past few years that payout ratio has actually been decreasing as well so that 2023 free cash payout ratio came in at 15.09% it's a pretty good sign when we come down here and look at our free cash flow versus dividends paid we can see our slow but stable growth in the dividends being paid out but the free cash flow growth from this company has been quite a bit faster we can see the tenure at about 8.3 7% in the 5ye at 99.2% now if we're going to touch on these dividend metrics for Apple I feel like it's only fair that we also touch on this huge stock buyback that they just announced a stock buyback of up to 110 billion now if we jump back over to our dividend breakdown spreadsheet look at their free cash flow in 2023 sitting pretty close to around 100 billion and if we look at it in 2022 was sitting at around 111 billion so pretty much what apple is saying is they're going to use all of their free cash flow to buy back stock now why is this a big deal well typically a company using all their free cash flow to either pay out dividends or buy back stock is probably something you don't want to see because it means they can't pay down debt it also means they can't reinvest back into the business but the situation with apple is a little bit different let me quickly show you why using the ticker data function if we go ahead and pull in Apple's cash and cash equivalents for 2023 here's what you're going to notice 2023 close the parenthesis and hit enter you can see this data will automatically load in Apple's already sitting on over $30 billion of cash and now if we do the exact same thing except this time look at their total current assets you'll notice something similar once again we want to see this for 2023 hit enter and we can see Apple's total current assets sitting at over 143.5 billion this company has plenty of cash using all of their free cash flow to buy back stock is no concern for this company because they have plenty of capital to pay out dividends and reinvest back into the business if we jump over to my other stock screener spreadsheet let's look at some of these metrics we can see buying back stock is nothing new for Apple in 2013 they had 25.9 billion shares outstanding and over the past decade they've been rapidly buying back shares and in 2023 it sitting at about 15.7 billion so that is a huge reduction in the total amount of shares outstanding and what this is going to do is it's going to boost all of the per share metric so for example earnings per share is going to automatically go up when they buy back shares assuming all other things constant the same is true for Revenue per share the same is true for free cash flow per share and if you want to understand why that is I'll be sure to link a video Down Below on the magic of share BuyBacks that I put on my second Channel now something also worth noting about Apple is their gross profit ratio has actually been increasing over the last 2 years look at the 10e average gross profit sitting at 39.7704 3 so when we look at this charted out we can see for the most part grow profit ratio was below 40% over the past decade but it's starting to spike up over the last few years good sign for the company our third dividend stock that just increase dividends is not a popular one at all I hardly ever see it talked about anywhere here on the internet but let me tell you this company has been a quality compounder over the past decade and that is pool Corporation stock ticker pool and this company just increased their dividend payouts by 99.1% if we jump over to Seeking Alpha we can see over the past year the company's only up around 3.68% but let's zoom out for a moment look at the past 10 years up 522 per. this company has way outperformed the market now if we go ahead and jump over to our dividend breakdown sheet we'll come up here plug in p and hit enter and again this data will load in thanks to Ticker data but if we come down here we can see the starting dividend yield sitting at 1.21% so yes this company has a low starting dividend yield but here's what's really really impressive actually there's a lot impressive about this company look at the dividend growth the 10-year dividend kager sitting at 18% the 5ye sitting at 16% and look at the explosive free cash flow growth we have a 10-year free cash flow kager of 25.3 7% and a 5-year free cash flow kager of 56.91 per. so here's what's more impressive than anything even though this company over the past 10 years has increased dividends at a rate of around 18% their free cashal payout ratio is even lower than it was 10 years ago look at that 2013 free cash L payout ratio sitting at 39.5% and right now it's sitting as of 2023 at 20.2 2% it's pretty mind-boggling to increase dividends at that high of a rate and still see a decrease in the free cash flow pay ratio now obviously that's because our free cash flow has exploded over the past decade look at the free cash flow versus dividends paid out that free cash flow is easily covering those dividend payments in 2023 so if we look at the yearly dividend payouts we can see in 2013 they were paying out 73 cents per share all the way up to $430 in 2023 and with the recent dividend hike now sitting at $440 per share if we jump over to our profitability spreadsheet we can see gross profit ratio staying nice and consistent something we typically like to see Revenue has been growing at a high rate over 5 and 10e time period and the same is true with their net income if we jump over to our stock screener page we went ahead and plugged in pool and of course earnings per share grow gr Revenue per share growth free cash flow per share growth and shares outstanding is declining as well so they are buying back shares but they also have very nice return on invested capital good reminder that you don't have to be a High-Tech high growth company to have good return on invested Capital 2023 roic for them sitting at 23.3% and our last dividend paying company that just increased dividends is going to be Dick Sporting Goods and they had a 10% dividend increase that's a pretty nice hike if we jump over to Seeking Alpha over the past year they've done pretty good up around 42 2.21% and year to date up around 38% so pretty impressive returns from this company during those time periods we jump over to the dividend breakdown sheet we'll come up here plug in dks and hit enter and once the data loads in we can see this company starting dividend yield sing at about 2.17% so that's kind of an average starting dividend yield low payout ratios as we can see here as well now when we look at the yearly dividend payouts you'll notice a couple things 2021 obviously massive dividend payout and 2023 the same is true there so what what is going on well this company has a management team that has decided on a few different instances that the best way to reward their shareholders at times is with a special dividend payment a special dividend payment is typically a one-time dividend payment and that is what they decided to do in 2021 in 2023 so you can see shareholders were greatly rewarded with big dividend payments during those years now even without those special dividend payments this company has seen really nice dividend growth over the past decade and the free cash flow has really spiked during this time period as well look at where they were from 2013 to 2019 they went from around 118 million to around 187 million but look at the spike in 2020 all the way up to 1.3 billion and as of 2023 it was sitting at about 939 million so that's a huge increase in the free cash load they're generating over the past decade if we look at this company on my stock screener we can see consistent growth in the revenue per share obviously a good sign for a growing company the same is true for earnings per share and free cash flow per share like we just saw both of these have spiked up pretty considerably decent levels of return on invested capital and the company is also buying back shares if we jump over to the profitability spreadsheet we can also see gross profit ratio is seeing increases another good sign that I typically look for in my companies so there you go those are four dividend growth companies that just recently increased the amount that you're paying out in dividends buying quality dividend growth stocks is the exact strategy I'm using to one day be able to live off dividend income so if you want to follow along on my dividend growth investing journey be sure to hit the Subscribe button and like always you can download any of my spreadsheets over on ticker dat.com so with all that being said thank you you guys so much for watching and please don't forget to like And subscribe to the channel

Channel: Dividendology

Views: 18,965

Keywords: dividend stocks to buy, dividend stocks to buy now, dividend investing, dividend increases, dividend stocks, 6 dividend increases you need to know, 10 dividend increases you need to know, best dividend stocks, best dividend stocks to buy now, dividend income, how to start dividend investing, dividend growth investing, dividend growth stocks, dividends, top dividend stocks, stocks to buy now, dividend increase, dividend growth, 5 dividend increases you need to know about

Id: psg952x1JBY

Length: 12min 3sec (723 seconds)

Published: Mon May 06 2024