Dividend growth investing has positively and radically changed my life. Following this investment strategy helped me to retire in my early 30s.
At its core, it’s an intuitive strategy. Only a great business can consistently grow its profit year in and year out for decades on end.
And what better proof of that growing profit than growing cash dividends?
Best of all, growing cash dividends make for an amazing source of totally passive income. Well, I’m here to show you dividend growth investing in action.
Three businesses recently increased the amount of dividends they’re paying to their shareholders. And I’ve covered all three of these stocks before.
The increased amount of these dividends means shareholders who are living off of dividends now have even more passive income to keep up with the rising costs of things like housing and food.
And what did shareholders have to do to receive these “pay raises”?
Absolutely nothing. That’s what’s beautiful about it. Let’s dig in.
The first stock I want to tell you about is Avista Corp. (AVA).
Avista just increased their dividend by 4.3%. This is the 19th consecutive year in which Avista has increased their dividend.
This Pacific Northwest utility is heavily invested into renewable energy sources. Over half of their electricity generation comes from hydro.
This puts them in a great position in terms of its investment appeal, carbon footprint, and regulatory standing.
We did a video back in July going over Avista and why I was investing in this utility for the long term.
The stock was priced lower back then, but I still think it’s highly worthy of investment here.
The second stock I want to highlight is Gilead Sciences (GILD).
Gilead Sciences recently announced a 4.4% dividend increase. This marks their seventh consecutive year of dividend increases.
We put together a video back in November showing why this stock is worth over $70/share. The stock was priced around $60 then. It’s now coming up on $70.
Now, this dividend increase came in just slightly below my long-term dividend growth rate estimate of 5%. But when I perform a dividend discount model analysis, I’m estimating a long-term average of growth.
This healthcare giant is still not fully priced here. So if you didn’t buy before, the opportunity hasn’t totally passed you by.
The third stock is Prudential Financial (PRU).
Prudential Financial just handed out a pay raise to shareholders via a 4.5% dividend increase. They’ve now increased their dividend for 13 consecutive years.
This stock got absolutely crushed during the pandemic swoon. Our video back in September noted the opportunity on this stock when it was still in the $60s.
In our video, I valued this stock using 3% long-term dividend growth rate. I did note that it was a very conservative number. And the stock is already running ahead of that.
The insurer and asset manager has recovered some, with the stock now around the $80 mark. But since I think the stock is worth over $80/share, and since the stock yields 5.5% even after some recovery, there’s still value and income to be had here.
— Jason Fieber
P.S. If you’d like access to my entire six-figure dividend growth stock portfolio, as well as stock trades I make with my own money, I’ve made all of that available exclusively through Patreon.
