Surprise Dividend Increases!
I couldn’t wait until the next update to post about two recent dividend increases. Visa (V) and AbbVie (ABBV) are both notable dividend increasers, but their most recent declarations have blown me away!
Visa (V) – 27.3% dividend increase over two quarters
Visa announced their 2018 first quarter dividend payment of $0.21/share. Their most recent dividend was $0.195/share, so that’s a 7.7% increase. That’s nothing out of the ordinary for good dividend growth companies. It is out of the ordinary because I wasn’t expecting another increase so soon after their previous quarter’s 18.2% increase from $0.165 to $0.195!
Over two quarters, Visa’s dividend will have grown a total of 27.3%. My annual yield on cost has gone from about 0.7% to 0.9% in less than a year. Some dividend investors may look past Visa because of this low yield, but I look forward to holding and adding to Visa for a long time. Capital appreciation sometimes goes hand-in-hand with a perpetually low dividend yield. I’ll gladly take that.
AbbVie (ABBV) – 50.0% dividend increase over two quarters
AbbVie gave us a similar surprise. After a healthy and on-schedule 10.9% increase from $0.64/share to $0.71/share for the first quarter of 2018, AbbVie announced an astounding 35% further increase from $0.71/share to $0.96/share. Altogether, that makes a 50% total dividend increase over the span of two quarters.
AbbVie has a great dividend growth history, going back past their spin off from Abbott Laboratories. In the last 10 months, my annual yield on cost has grown from 4.0% to now 6.0% for my ABBV investment.
Both of these companies’ dividend increases were unexpected, pleasant surprises! Each of them typically raise their dividends once per year, yet this time announced increases in consecutive quarters. Dividend growth investing is boring and predictable a lot of the time, so it’s good to recognize these kinds of great surprises.