Yearly Dividend Growth

[cemanuel]

This thread started on SA and I thought it was interesting enough to put here. I'll begin with my response from there. All my dividends for December have been announced so I can plug in 2021 numbers, very close anyway.

My annual dividend growth:

• 2018: 157.86% - no surprise. 2017 was my 1st year in the market, not starting until March 8
  
• 2019: 40.71%
  
• 2020: 30.46%
  
• 2021 (projected but will be close): 2.45%
  

For 2021 at some point I will calculate this for my taxable account alone. A big chunk of the reason for the slow growth is changing my Roth - first de-REITing (and BDCs) early this year, then de-incoming/growthifying later. Another large impact is the two MSM specials in 2020. I suspect income growth in my taxable account will be close to 10%, well over without the MSM impact. Not adding new cash or buying more dividend-payers starting in June plays a role too.

*I didn't see this topic posted elsewhere, let me know and I'll delete if I'm duplicating.

[crimsonghost747]

Two very different numbers to compare.
First is of course the total amount of dividends. The ultimate goal for many of course is to grow this, the issue is that it's not a very effective comparison as it gets automatically distorted if you are adding new money or even just reinvesting dividends. Obviously still a good statistic to look at.

I like to look at "organic dividend growth", I do not know if this is a real term or not. But basically just checking the amount of dividend growth purely based on dividend raises. This metric is more handy for seeing what level of income growth you can expect when you, at some point, actually start pulling the dividends out on a monthly/quarterly basis. Over the long term this number needs to be higher than the inflation numbers if you wish that your purchasing power keeps up (or even grows) during your retirement days.

I haven't calculated either for myself (for 2021) yet. I'll get to that in January or something.

[fenders53]

Don't stress that. We are getting older and repeat ourselves often lol.

I wish I could track my dividend growth but my option selling income usually dwarfs it and I dumped some yield traps so I've become more focused on the bottom line of my account statement. I definitely enjoy tracking others progress though.

One thing I do track is dividend growth company by company, and my estimate if the rate is sustainable.

[ken-do-nim]

(12-12-2021, 08:00 AM)crimsonghost747 Wrote: Two very different numbers to compare.
First is of course the total amount of dividends. The ultimate goal for many of course is to grow this, the issue is that it's not a very effective comparison as it gets automatically distorted if you are adding new money or even just reinvesting dividends. Obviously still a good statistic to look at.

I like to look at "organic dividend growth", I do not know if this is a real term or not. But basically just checking the amount of dividend growth purely based on dividend raises. This metric is more handy for seeing what level of income growth you can expect when you, at some point, actually start pulling the dividends out on a monthly/quarterly basis. Over the long term this number needs to be higher than the inflation numbers if you wish that your purchasing power keeps up (or even grows) during your retirement days.

I haven't calculated either for myself (for 2021) yet. I'll get to that in January or something.

Exactly my thoughts!

I guess if you track Yield on Cost year to year, the differential is this?

[cemanuel]

(12-12-2021, 08:00 AM)crimsonghost747 Wrote: Two very different numbers to compare.
First is of course the total amount of dividends. The ultimate goal for many of course is to grow this, the issue is that it's not a very effective comparison as it gets automatically distorted if you are adding new money or even just reinvesting dividends. Obviously still a good statistic to look at.

I like to look at "organic dividend growth", I do not know if this is a real term or not. But basically just checking the amount of dividend growth purely based on dividend raises. This metric is more handy for seeing what level of income growth you can expect when you, at some point, actually start pulling the dividends out on a monthly/quarterly basis. Over the long term this number needs to be higher than the inflation numbers if you wish that your purchasing power keeps up (or even grows) during your retirement days.

I haven't calculated either for myself (for 2021) yet. I'll get to that in January or something.

I track that too. Right now I'm at 9.00% in my taxable account. Completely different metric and, IMO, thread.

Most people will want to aim for a dollar figure in retirement planning. You can't live on a percentage. But annual dividend growth will be more important during the accumulation period - that's how you can tell if you will be able to reach your dividend income target. Organic becomes more important for the  harvesting period.

[fenders53]

I agree. The only percentage that matters once you retire is the size of you raises vs your next years budget and desired draw down rate. A lot of retirees will dump some growth for income stocks when that day comes. It's arguably wiser than getting overly concerned with dividend yield when you are young.