Long Term Dividend Growth

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    Posted: 26 April 2012 12:14 PM #121

    Exxon increases dividend.

    http://finance.yahoo.com/news/exxon-top-dividend-payer-21-193412685.html

    OK a few more thoughts on this.

    Their dividend increased 1200% in 16 years following 2 splits.

    This is a very stable company that is not growing much at all.

    I am noticing that most companies increase dividend once a year, so now I expect Apple to increase its dividend in July 2013.

    I think Apple can match GE at 7300% or Exxon at 1200% increase in dividends.  If you take an average and get 4200% increase in 16 years you get a whoping $420 a share in dividend alone.  If we grow from 1.8% to about a 3% payout from its stock price that would put our stock in the $14000 a share territory.  Obviously we will split at least 4x times so actual share price may be only $350.


    So the point I am trying to make is that Apple is in a position to increase dividend and its stock price which is a double whammy.  People need to forget monthly and yearly moves, but look at 5 to 15 years in the future.

    Splits become incredibly important, because it can double, triple, or 5x the income stream of those holding the stock. 

    Buy and Hold

         
  • Posted: 26 April 2012 12:48 PM #122

    Sponge, thank you for the last few pages. Not sure how I was blind to this thread before now. I need to add to my paltry 37 shares!

         
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    Posted: 26 April 2012 05:04 PM #123

    omacvi - 20 April 2012 04:21 AM

    Is everyone in options here and don’t care about a dividend?

    I just posted in the options strategy thread about using covered calls as an extra dividend. I’m estimating that I’ll be able to yield at least as much as the AAPL dividend.

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  • Posted: 27 April 2012 02:46 PM #124

    omacvi - 20 April 2012 04:21 AM

    Is everyone in options here and don’t care about a dividend?

    I am in options, and also hold some shares.  I am also starting to open some dividend positions that are not Apple.

    Apple will start off paying a relatively low yield, so I am not holding those primarily for income purposes.  The company I bought today is a dividend growth company is its current yield is 4%. 

    Looking at some others that yield 3.5 to 6% with sustainable payout ratios

         
  • Posted: 27 April 2012 03:35 PM #125

    roni - 27 April 2012 05:46 PM
    omacvi - 20 April 2012 04:21 AM

    Is everyone in options here and don’t care about a dividend?

    I am in options, and also hold some shares.  I am also starting to open some dividend positions that are not Apple.

    Apple will start off paying a relatively low yield, so I am not holding those primarily for income purposes.  The company I bought today is a dividend growth company is its current yield is 4%. 

    Looking at some others that yield 3.5 to 6% with sustainable payout ratios

    Take a look at Kinder Morgan. KMR or KMP.  Good yield in a stable sector.

         
  • Posted: 27 April 2012 03:45 PM #126

    huskerrx - 27 April 2012 06:35 PM

    Take a look at Kinder Morgan. KMR or KMP.  Good yield in a stable sector.

    Have held KMP before

         
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    Posted: 27 April 2012 09:00 PM #127

    OK

    I think does who subscribe to the theory that a split also splits the dividend are partially correct.  In essence that would happen, but the company would then also double to the dividend to keep it constant.

    I don’t think Apple would do that.  Not sure of their exact policy regarding dividend yet, but follow along.

    Everyone agrees that 1.8% or 10.60 a years is what they announced.  The 1.8% is off the price of the stock the last day before they announced which was around 580.

    Now when aapl goes up to $1000 and the dividend is left alone, the % goes down to 1.06% .  If the stock were to go down to $300 a share then the 10.60 dividend would be 3.53.

    If they are determined to maintain 10.6 regardless of stock price, then they could increase dividend as the stock appreciates or decrease it as it goes down.

    If they split the stock and want to maintain 1.8% of stock price as their target, I would expect them to increase the dividend.

    The three stocks I studied who data from Yahoo Finance, IBM. GE, XOM all had dividend increases and splits.  With the splits the dividend remained the same, so I would assume those companies maintained the same yield but increasing dividend without formally announcing a dividend increase.

    So in conclusion, if Apple thinks their stock is being left in the dust they can simply split the stock and those with dividends will double their money and not care as much about the stock price.

         
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    Posted: 27 April 2012 11:04 PM #128

    omacvi - 28 April 2012 12:00 AM

    OK

    I think does who subscribe to the theory that a split also splits the dividend are partially correct.  In essence that would happen, but the company would then also double to the dividend to keep it constant.

    I don’t think Apple would do that.  Not sure of their exact policy regarding dividend yet, but follow along.

    Everyone agrees that 1.8% or 10.60 a years is what they announced.  The 1.8% is off the price of the stock the last day before they announced which was around 580.

    Now when aapl goes up to $1000 and the dividend is left alone, the % goes down to 1.06% .  If the stock were to go down to $300 a share then the 10.60 dividend would be 3.53.

    If they are determined to maintain 10.6 regardless of stock price, then they could increase dividend as the stock appreciates or decrease it as it goes down.

    If they split the stock and want to maintain 1.8% of stock price as their target, I would expect them to increase the dividend.

    The three stocks I studied who data from Yahoo Finance, IBM. GE, XOM all had dividend increases and splits.  With the splits the dividend remained the same, so I would assume those companies maintained the same yield but increasing dividend without formally announcing a dividend increase.

    So in conclusion, if Apple thinks their stock is being left in the dust they can simply split the stock and those with dividends will double their money and not care as much about the stock price.

    Sponge,
    Perhaps a recheck of the Yahoo data might be in order. If the yield remained the same, the dividend was not doubled, it was divided by the split ratio.
    It has been my experience that dividend increases are approved by the board of directors, so there would be a formal vote.
    It is unlikely that Apple has targeted a specific yield, but they may have targeted a payout ratio of the free cash flow. As the FCF rises, the company would free safe to increase the dividend. As Apple’s FCF is huge and growing, the company should feel quite comfortable raising the dividend and by starting with a small dividend, there is a lot of room for upside. If there is one thing that will get a dividend growth investor salivating, it is large 10%+ dividend increases. This is what we want to see, a healthy dividend increase. More than one increase a year is not unheard of, but might be a little greedy smile

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    Posted: 27 April 2012 11:41 PM #129

    stkstalker - 28 April 2012 02:04 AM

    Perhaps a recheck of the Yahoo data might be in order. If the yield remained the same, the dividend was not doubled, it was divided by the split ratio.
    It has been my experience that dividend increases are approved by the board of directors, so there would be a formal vote.

    I would agree with you, but since the board already approved a $2.65 dividend per share, that remains the same despite a split.  Otherwise the announcement would include a decrease in dividend per share.

    Yahoo shows a change in stock price with split but the dividend amount remains the same unless an increase is approved a year later.  Then you see a change.

         
  • Posted: 27 April 2012 11:55 PM #130

    omacvi - 28 April 2012 02:41 AM
    stkstalker - 28 April 2012 02:04 AM

    Perhaps a recheck of the Yahoo data might be in order. If the yield remained the same, the dividend was not doubled, it was divided by the split ratio.
    It has been my experience that dividend increases are approved by the board of directors, so there would be a formal vote.

    I would agree with you, but since the board already approved a $2.65 dividend per share, that remains the same despite a split.  Otherwise the announcement would include a decrease in dividend per share.

    Yahoo shows a change in stock price with split but the dividend amount remains the same unless an increase is approved a year later.  Then you see a change.

    Wrong

         
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    Posted: 28 April 2012 12:54 AM #131

    roni - 28 April 2012 02:55 AM
    omacvi - 28 April 2012 02:41 AM
    stkstalker - 28 April 2012 02:04 AM

    Perhaps a recheck of the Yahoo data might be in order. If the yield remained the same, the dividend was not doubled, it was divided by the split ratio.
    It has been my experience that dividend increases are approved by the board of directors, so there would be a formal vote.

    I would agree with you, but since the board already approved a $2.65 dividend per share, that remains the same despite a split.  Otherwise the announcement would include a decrease in dividend per share.

    Yahoo shows a change in stock price with split but the dividend amount remains the same unless an increase is approved a year later.  Then you see a change.

    Wrong

    +1 - Sponge, a split is meaningless with regard to total value of one’s investment and the total dividend amount received for that investment.  Typically, in your example, if AAPL did a 2:1 split, your $2.65 divy per share would become $1.325 per share unless the board agreed to to an increase for that quarter to say, $1.50, for example, but that would have nothing to do with the split.  I have been investing in DRIPs since the early 1980’s and have seen numerous companies split over the years and have seen how they handle their declared dividend rate per share after the split.

    FWIW, the board has not yet declared any AAPL dividend.  They will declare the dividend later this year.

         
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    Posted: 28 April 2012 02:52 AM #132

    madmaxroi - 28 April 2012 03:54 AM
    roni - 28 April 2012 02:55 AM
    omacvi - 28 April 2012 02:41 AM
    stkstalker - 28 April 2012 02:04 AM

    Perhaps a recheck of the Yahoo data might be in order. If the yield remained the same, the dividend was not doubled, it was divided by the split ratio.
    It has been my experience that dividend increases are approved by the board of directors, so there would be a formal vote.

    I would agree with you, but since the board already approved a $2.65 dividend per share, that remains the same despite a split.  Otherwise the announcement would include a decrease in dividend per share.

    Yahoo shows a change in stock price with split but the dividend amount remains the same unless an increase is approved a year later.  Then you see a change.

    Wrong

    +1 - Sponge, a split is meaningless with regard to total value of one’s investment and the total dividend amount received for that investment.  Typically, in your example, if AAPL did a 2:1 split, your $2.65 divy per share would become $1.325 per share unless the board agreed to to an increase for that quarter to say, $1.50, for example, but that would have nothing to do with the split.  I have been investing in DRIPs since the early 1980’s and have seen numerous companies split over the years and have seen how they handle their declared dividend rate per share after the split.

    FWIW, the board has not yet declared any AAPL dividend.  They will declare the dividend later this year.

    Can you help explain thi?

    http://finance.yahoo.com/q/hp?s=GE&a=00&b=2&c=1962&d=03&e=28&f=2012&g=v

         
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    Posted: 28 April 2012 03:17 AM #133

    Here is the company’s website that shows dividend history.  Look at the per share amounts prior to and after each split…

    http://www.ge.com/investors/stock_info/dividend_history.html

    As for your link, it appears they are adjusting the dividend amounts for the stock split based on their footnote.  I don’t agree with their presentation as it is misleading as the amounts shown are not actual dividend rates.  Trust me, you are not doubling your dividends as a result of a split.

         
  • Posted: 28 April 2012 03:19 AM #134

    +1 - Sponge, a split is meaningless with regard to total value of one’s investment and the total dividend amount received for that investment.  Typically, in your example, if AAPL did a 2:1 split, your $2.65 divy per share would become $1.325 per share unless the board agreed to to an increase for that quarter to say, $1.50, for example, but that would have nothing to do with the split.  I have been investing in DRIPs since the early 1980’s and have seen numerous companies split over the years and have seen how they handle their declared dividend rate per share after the split.

    FWIW, the board has not yet declared any AAPL dividend.  They will declare the dividend later this year.

    Can you help explain thi?

    http://finance.yahoo.com/q/hp?s=GE&a=00&b=2&c=1962&d=03&e=28&f=2012&g=v

    Historical prices are generally adjusted to reflect splits.

         
  • Posted: 28 April 2012 03:24 AM #135

    AppleDoc - 26 April 2012 03:48 PM

    Sponge, thank you for the last few pages. Not sure how I was blind to this thread before now. I need to add to my paltry 37 shares!

    >>


    > 3x my holdings!

    But just keep buying and holding!!