I just love reading the full year results of my stock holdings which are often published in January and February. Going through these reports is interesting, it gives me a feeling about the businesses I own small pieces of. I can see specific challenges and achievements of these companies and it shows me of course their financial strength and their growth prospects.

One of the advantages of being a Dividend Growth Investor is the fact, that we get paid for our passion for learning about businesses and financial issues.

And you know what? 

I will have 20 % higher cash returns in 2018 without breaking a sweat

So far, over 70 % of the businesses in my investment portfolio have published full year results for 2017 and given information about their dividend payments. That allows me to make predictions with regard to Year over Year (YoY) organic dividend growth and my expected Yield on Cost (YoC) for specific positions.

Compared to 2017, projected dividend income for the current year will be substantially higher, jumping from USD 4’510 to USD 5’500.

This is largely due to dividend hikes from the businesses I am a shareholder and also  because I added new positions in 2017 and early 2018, these stocks will now become “productive” and pay me dividends for the first time.

The beauty of the “Business model” Dividend Growth Investing is the fact, that received cash payments from strong companies in our investment portfolios are very predictable, stable and growing over time.

At the beginning of the year I can already see, that I will surely over-achieve the passive income goal I set for the whole year (USD 5’500 in dividends and USD 500 in received interest payments).

That’s why I set the bar now higher, targetting a passive income of at least USD 6’500, representing an increase of 40 % YoY!

I have a very strong basis for further growth of my Dividend Machine, it’s amazing, how generous businesses are with dividend hikes

I target a savings rate of well above 50 % for 2018 and I plan to put a substantial amount of money to work over the next months.

So one thing is for sure: I would be particularily pleased, if stock market prices came down at least 20 %.

Very robust expected organic dividend growth of my stock holdings

So, around 70 % of the businesses in my share portfolio have already made their dividend announcements, whereas

• 21 companies will hike their dividends
• 3 businesses declared steady dividend payouts and
• 2 corporations are set to slash their payouts 

First, let’s have a look at the group of “dividend growers” with quite remarkable increases and let’s also have a look at the projected dividend yield on cost (YoC) with regard to these postitions (net of taxes).

• PepsiCo  + 15 %; YoC 2.4 %
• Coca Cola  + 5.4 %; YoC 2.64 %
• Nestlé  + 2.7 %; YoC 5.11 %
• Heineken  + 9.7 %; YoC 2.2 %
• Walt Disney  + 7.7 %; YoC 1.55 %
• Imperial Brands  + 10 %; YoC 5 %
• Reckit Benkiser  + 7 %; YoC 2.5 %
• Henkel  + 10.6 %; YoC 1.4 %
• Chevron  + 3.7 %; YoC 3.3 %
• Zurich Insurance  + 5.8 %;  YoC 8 %
• Swiss Re  + 3.2%; 5.2 %
• UBS  + 8 %; YoC 4.2 %
• Deutsche Telekom  + 8.3 %; YoC 5 %
• Orange  + 7.7 %; YoC 2.6 %
• Roche  + 1.2 %; YoC 5 %
• Novartis  + 1.8 %; YoC 4.33 %
• ABB  + 2.6 %; YoC 3.33 %
• Nokia + 11.7 %; YoC 1.5 %
• BHP Billiton + 39 %; YoC 5.3 %
• Rio Tinto + 60 %; YoC 6.5 %
• South32  + 100 % (increase ordinary dividend plus special dividend) 

These dividend hikes translate into USD 500 in additional cash income.

So far, three businesses announced to hold their payouts steady:

• HSBC: YoC 6.2 %
• Royal Dutch Shell: YoC 7.4 %
• Glaxo Smith Kline: YoC 5.1 %

As you can see, my YoC on these positions are already very attractive and in the case of HSBC and GlaxoSmithKline there are Dividend Reinvestment Programs resp. Script Dividend Programs allowing me to handsomely increase my positions over time. Royal Dutch Shell declared to stop its Scrip Dividend Program and only make cash payouts. I am fine with that, the issuance of shares to pay dividends led to a dilution for existing shareholders, the flipside is that there is a witholding tax on cash dividends from Royal Dutch Shell of 15 %, so my income from that wonderful company will be lower than in the previous year (it was around USD 600 in 2017 and will be around USD 500 in 2018).

Unfortunately, two companies in my portfolio announced to slash their dividends:

• Credit Suisse – 64 %
• Telefonica – 34 %

These payout cuts have been anticipated and long term fundamentals and prospects for these two businesses remain still solid. But of course these dividend reductions will lower my dividend income growth by around USD 60 in 2018.

So, roughly 70 % of “my companies” have announced their dividends. AND there is more growth to come

Over the next weeks, I expect following companies to announce a boost of their dividends in a single digit range:

• Exxon Mobil
• JM Smucker
• Unilever
• Diageo 
• Bayer 
• Banco Santander 
• Legal & General 
• AVIVA 
• Porsche Automobil Holding SE 

As said before, several stock positions will become “productive” in 2018. Following stock acquisitions  will pay me dividends for the first time:

• BMW
• Henkel
• AVIVA
• Legal & General
• PepsiCo (I will receive three of four quarterly dividends in 2018)

I will get around USD 540 in additional dividends from these five businesses.

 

So, all in all, I am pretty confident to achieve my revised passive income goal for 2018 in the amount of USD 6’500!

 

What about you fellow Reader, have you added some new positions to your portfolio and received some nice dividend hikes?

 

Disclaimer
You are responsible for your own investment and financial decisions. This article is not, and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.