Increasing Dividend Yield Part VII: Time
This is the seventh and final installment in a multi-part series that looks at various options used by income investors to boost their yield while waiting for dividend growth to lift their portfolio’s overall yield-on-cost. Last time we looked at Increasing Dividend Yield Part VI: Crypto Currency Earning. This week we are looking at Time.
Yield does not come without a price. The six options looked at in prior weeks carry some form of added risk and/or complexity. Ultimately, dividend growth investors realize that long-term and sustainable high-yield investments are grown over time. This is accomplished by purchasing high-quality dividend investments with a reasonable yield and a long history of growing their dividends, and waiting for the yield on cost to grow. Consider the following stocks:
Main Street Capital Corporation (MAIN)
– Current Yield: 7.17%
– Assumed Dividend Growth Rate: 2.38%
– Yield On Cost in 10 Years: 9.08%
– Yield On Cost in 20 Years: 11.49%
AFLAC Incorporated (AFL)
– Current Yield: 2.90%
– Assumed Dividend Growth Rate: 8.95%
– Yield On Cost in 10 Years: 6.84%
– Yield On Cost in 20 Years: 16.12%
Abbvie Inc. (ABBV)
– Current Yield: 3.66%
– Assumed Dividend Growth Rate: 8.86%
– Yield On Cost in 10 Years: 8.56%
– Yield On Cost in 20 Years: 20.00%
T. Rowe Price Group, Inc. (TROW)
– Current Yield: 3.94%
– Assumed Dividend Growth Rate: 11.11%
– Yield On Cost in 10 Years: 11.30%
– Yield On Cost in 20 Years: 32.42%
Lowe’s Companies, Inc. (LOW)
– Current Yield: 1.73%
– Assumed Dividend Growth Rate: 17.82%
– Yield On Cost in 10 Years: 8.93%
– Yield On Cost in 20 Years: 46.05%
The growth rates used above are the minimum of the compound annual dividend growth rate for the last 1, 3, 5, 7, 10 years or 15% if dividends grew on average in excess of 15% for each consecutive 4 year period, within the last 10 years. The growth rates are for illustrative purposes only. Obviously, no one can definitively say what any stock’s future dividend growth rate will be. However, there were dividend growth superstars over the past 10-years and, needless to say, there will be several in the next 10 years.
Below are links to the other six options to increase the yield in our income portfolio:
1. Increasing Dividend Yield Part I: Utilities
2. Increasing Dividend Yield Part II: REITs
3. Increasing Dividend Yield Part III: Preferred Stock
4. Increasing Dividend Yield Part IV: Bonds
5. Increasing Dividend Yield Part V: MLPs
6. Increasing Dividend Yield Part VI: Crypto Currency Earning
Tags: MAIN, AFL, ABBV, TROW, LOW,
Published at Tue, 31 May 2022 00:30:00 -0700
