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| Getting a raise while sitting on the couch? Sign me up! Thanks to Analog Devices for another dividend increase! |
There is an old Chinese proverb that says “the best time to plant a tree was 20 years ago, the next best time is now”. The reason for this is that it takes time for a tree to grow and thrive and to begin seedingits benefits. Dividend growth investing is about the same way. It takes consistent saving and investing, as well as time and patience to allow the power of dividend growth.
That’s why one of my favorite things is when one of the companies I own decides to pay out more in dividends. You mean I get a raise just for owning a small piece of a company? I don’t go and do R&D on new products or technology. It does not sell any products. It does not manage employees or inventory. Not making sales calls. All I had to do was have the foresight to invest some of my savings great companies.
On February 20, the Board of Directors of Analog Devices (ADI) announced an increase in its quarterly dividend payment. The dividend increased from $0.86 to $0.92 which is an excellent increase of 9.2%. Shares currently yield 1.95% based on the new annual payout.
The new dividend rate will be payable on March 15 to shareholders of record from March 5.
Since I hold 38,108 shares of analog devices in my FI portfolio, this increase increased my future 12 month dividends by $9.15. This is the 3rd increase I have received from Analog Devices since I started a position in 2021 with total organic dividend growth over that period coming in at 33%.
A full screen version of this chart can be found here.
Analog Devices is a dividend challenger with 21 consecutive years of dividend growth. While their dividend growth is not the fastest. it is still growing at a very strong rate and is quite consistent over time.
Since 2004, Analog Devices’ annual dividend growth has ranged from 5.0% to 75.0% with a mean of 16.7% and a median of 10.8%.
There have been 16 rolling 5-year periods during that period with annual dividend growth ranging from 7.4% to 32.0% with a mean of 12.6% and a median of 11.2%.
During this period, there have also been 11 rolling decades with Analog Devices’ annual dividend growth ranging between 9.5% and 21.9% with a mean of 11.9% and a median of 10.1%.
The 1, 3, 5 and 10 year rolling dividend growth rates for Analog Devices since 2004 can be found in the chart below.
A full screen version of this chart can be found here.
For dividend yield theory I consider the fair value range to be the forward dividend yield +/- 10% compared to the 3 year moving average, the under/overvalue range is between 10%-20% deviation from the mean and The significant over/under is greater than a 20% deviation from the mean.
You can find a full screen version of this chart here.
Analog Devices’ three-year average forward dividend yield is 1.82% corresponding to a share price of $202 based on the new annual payout.
I find the fair value range based on dividend yield theory to be the 3 year moving average return +/- 10%. This gives a fair value range of $184 – $225 and suggests that the stock is currently trading at the lower end of fair value.
Wrap up
This increase increased my forward dividends by $9.15 with zero effort on my part. That’s right, absolutely nothing to contribute to their functions. Based on my FI Portfolio’s current yield of 2.65%, this increase is like I invested an additional $345 in capital. Except I didn’t! One of the companies I own just decided to send more cash my way.
So you can eventually reach the intersection where your dividends received exceed your expenses. This is INVESTMENT IN DIVIDEND GROWTH BUSINESS! The beauty of the dividend growth investing strategy is that you create your dividends through new capital investments as well as dividend increases from the companies you own.
This is the 19th dividend increase I have received from my FI portfolio companies. Combined these increases increased my future 12 month dividends by $193.30.
My FI Portfolio12 month forward dividends are $12,339.77 Including my FolioFirst The forward portfolio dividends of $251.93 bring my accounts total taxable dividends to $12,591.70. My Roth IRA’s 12-month forward dividends are $1,290.90. My Rollover IRA’s term dividends are $5,149.93. On all accounts I expect to receive $19,032.53 in dividends next year.
I also started compiling dividend data on many of the companies I own or would like to own. You can find analog devices here which includes dividend history (as much as I can find without spending hours hunting it down), rolling dividend growth rates, and dividend yield theory. To see other companies I’ve already collected the data for, you can check out Dividend Companies page. Check it out and let me know what you think.
Do you have stock in Analog Devices?
Please share your thoughts below.
