The dividend growth investing strategy has totally changed my life. What’s this strategy all about?
Well, it’s about investing in world-class enterprises that pay reliable, rising cash dividends to shareholders. Don’t tell me how profitable you are. Show me. Show me the money. And don’t just show me money. Show me more money, year in and year out, for decades on end.
See, passive income is great. But it ain’t that great if it isn’t growing. Inflation can and will slowly eat away at your purchasing power if that passive income isn’t growing. That’s where dividend increases come in – they protect, and even grow, your purchasing power.
This means you can keep up with the rising costs of goods and services. And if your dividend income is growing faster than inflation, that can slowly start to unlock more lifestyle choices for you.
The really cool thing about these dividend increases is that they don’t require you to do anything to receive them. It’s like getting a pay raise, but doing absolutely nothing to get it.
Just hold shares. That’s so easy, even I can do it.
I want to tell you about three recent dividend increases that may have given a big boost to your passive income.
Dividend Increase #1: Digital Realty Trust (DLR)
The first dividend increase I want to share with you came from Digital Realty Trust, Inc.(DLR).
Digital Realty Trust just increased their dividend by 3.6%. Not a humongous pay raise. But it came to shareholders without doing anything. More money is never, ever a bad thing.
And this dividend increase should have context. This stock yields 3.5%.
So it’s a pretty nice balance between both yield and growth here. Stocks that have higher yields tend to have lower growth rates, and vice versa. It’s up to shareholders to decide where they want to be in that matrix.
Either way, Digital Realty Trust hands out dividend increases like clockwork. This is the 17th consecutive year in which the company has increased its dividend.
Their five-year dividend growth rate is actually 5.5%, so this one came in a bit light. But a 3.5% yield paired with a mid-single-digit dividend growth rate is certainly nothing to sneeze at. And the stock looks fairly valued.
Dividend Increase #2: Home Depot (HD)
The second dividend increase I want to tell you about came from Home Depot Inc. (HD).
Home Depot increased their dividend by 10%. A double-digit dividend increase always makes me smile. This business is just killing it across the board. And long-term shareholders are reaping the rewards.
All of those people leaving cramped city apartments and moving into suburban homes? Yeah, Home Depot loves it.
And so do shareholders. Profits are through the roof, which is why they’re able to hand out a big dividend increase.
This marks the 12th consecutive year of dividend increases for Home Depot.
And with the way things are playing out in the US right now, I think they’re just getting started. I imagine this stock will become a Dividend Aristocrat one day. And with the stock not outrageously expensive right now, it’s worth a good look as a long-term investment.
Dividend Increase #3: Domino’s Pizza (DPZ)
The third dividend increase I’m sharing with you came by way of Domino’s Pizza, Inc. (DPZ).
Check this out. Domino’s increased their dividend by a whopping 20.5%. That’ll pay for some pizza, folks. If you’re a shareholder, this is the easiest 20% pay raise you’ll ever get in your life.
Domino’s benefited big time from how the pandemic situation played out and increased demand for pizza delivery.
As with Home Depot, Domino’s is in the right business at the right time. But that was also true before the pandemic. And it’ll be true after the pandemic.
Keep in mind, Domino’s was handing out double-digit dividend increases before all of this happened. And they’re in a great position to keep it up. This is the 9th consecutive year of dividend increases for Domino’s. And more dividend increases are about as sure to fall into place as, well, dominos.
The stock doesn’t look super cheap here. But it’s difficult to expect a big sale on a stock when it’s firing on all cylinders like this.
— 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.