Mar 032014
 

Dividend growthSo far in 2014 there have been a great many companies that announced dividend increases and luckily, I actually own shares in some of them. To this day I still get excited every time I hear one of the stocks I own increases their dividend. You see, dividend increases are THE most important cog in the dividend investing machine I’m trying to create. Without them, my retirement income would fall flat thanks to the artificial growth factor known as inflation. Also, dividend increases allow my meager investments to grow much faster than with stagnant payouts. With every increase, my retirement savings gets catapulted higher with less effort and capital needed.

Let’s take a look at some of the stocks in my portfolio that announced dividend increases so far in 2014:

SJR.B-  8%

CNR-  16%

BCE-  6%

RCI.B-  5%

TRP-  4%

KO-  9%

RY-  6%

KMB-  3.7%

TD-  9%

Combined with the increases announced in December 2013 from ENB and FTS , I can tell it’s going to be a very good year for my dividend income. The few pennies per share might not seem significant at first but when you multiply them by hundreds or thousands of shares, then that’s where the magic happens. Why, all these small increases over time will mean the difference between eating dented cans of cat food in my retirement or having a nice tender steak freshly pureed in the blender.  YUMMY!

I’ll never forget the time I was shopping for groceries and saw an older woman a few places ahead of me complaining about the prices of her marked down bread, dented cans and vegetables. I think it was right then and there that I first realized I had to take my retirement planning more seriously. Cost of living never decreases and I’ve been on this planet long enough to actually notice the prices increasing on the shelf.

It’s a very scary feeling, especially when your pay cheque doesn’t increase with it. I remember feeling the pinch from my old job and having to reduce my spending in other areas as my wage was stagnant for over 5 years. The bills kept going up but my pay stayed the same. I use to stress out about it so much but now with my new career it is highly unlikely it will happen again. Dividend increases will shield me from this feeling when I choose to retire which is just one of the many benefits and reasons I choose to invest in dividend paying stocks.

I’ve got plenty of Time…

A lot of my friends regard saving for retirement as something they will worry about down the road. This might seem like the right mindset to have, especially with raising a family now but it’s actually making it harder for them then they might realize. When I was younger I had little money and a lot of time. I tried to save $50-$100 every month which was able to compound over a long period of time in mutual funds. Eventually I had enough to purchase my own shares in dividend paying companies and then my savings really started to grow.

If I tried to start saving now to reach the same goal, it would to cost a lot more money to do so. In fact it would probably take $500 or more a month in order to catch up to where I’m at now which to me, is a significant increase! Since I started so early, it has opened up a lot more options for me than most people have. I could either continue on course for a comfortable retirement or I could step it up a few notches and enjoy retirement a whole lot sooner. I even have the option to set my sights for somewhere in the middle. Since life likes to throw curveballs, it sure is nice to have some wiggle room.

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  3 Responses to “Dividend Increases and More Dividend Increases Oh My!”

  1. Hey LB, I am really enjoying your blog!

    As an investor with limited funds would it make more sense to buy a few shares in a solid $30+ dividend stock or to buy a higher yield, less expensive ($5-$15) dividend stock to accumulate some dividend income quicker.? Thanks.

    • Hey Eric,

      It all depends on how high a yield you are talking, and if its sustainable. Starting out I would go with the solid company as the dividends will come eventually. It will be interesting to see what impact the tension with Russia might have on the market. We might see a steep pull back depending on what happens.

  2. Hey Steve,

    Check out Enbridge today! We all just received a 33% raise…for doing nothing. :-)

    Muldoon

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