Well, July sounds like as good a time as any to review the dividend projections that I made last December right around Christmas time. To see my source article of 2012 dividend predictions, click here. Now that the dividend raises have all been announced for Coca-Cola (KO), Procter & Gamble (PG), Johnson & Johnson (JNJ), PepsiCo (PEP), and Colgate-Palmolive (CL), let's take a look at how I did.
1. For Coca-Cola, I anticipated a quarterly dividend increase between $0.50 and $0.52 per share. In fact, it raised its dividend to $0.51 per share.
2. For Procter & Gamble, I called for a dividend increase somewhere between $0.54 and $0.56 per share. In fact, the company raised its quarterly dividend to $0.562 per share.
3. For Johnson & Johnson, I predicted a dividend between $0.59 per share and $0.62 per share. In reality, it raised its dividend to $0.61 per share.
4. For Pepsi, I anticipated a dividend between $0.53 and $0.56 per share. In reality, Pepsi raised its dividend by $0.5375 per share.
5. For Colgate-Palmolive, I predicted a dividend increase between $0.60 and $0.63 per share. In reality, the company raised its dividend to $0.62 per share.
I got four out of the five predictions right. In the case of Procter & Gamble, where I was wrong, I was off by 2/10 of a penny. For me, this illustrates what I like so much about income-focused investing with dividend growth stocks. There's nothing in my predictions that display any brilliance or particular cleverness. I just looked at what these blue chips have historically done, and then made a reasonable guess about the future range of dividend increases largely based on the companies' past track records.
Income-focused investing in the stock market is one of the few ways that we can exercise some control over the market. Right now, General Electric (GE) pays a quarterly dividend of $0.17 per share. I have no idea what price shares of General Electric stock will be trading at this time next July, but I have a pretty reasonable guess that the company will be paying out a quarterly dividend between $0.19 and $0.22 per share. For investors looking to manage expectations, focusing on income can give you a certainty that focusing on the whims of Mr. Market cannot.
Now, you might say making these predictions about the next annual dividend increase is easy, but that's kind of the point, isn't it? I don't want to worry about what some obscure politician is going to do in Europe, so I'll deal in American blue chips. I don't want to worry about what price Exxon Mobil (XOM) will be trading at this time next year, so I'll focus on the dividend raises. One of the most liberating things about investing is that we are all free to forge whatever path we want, be it easy or hard. I find a tremendous appeal in focusing on the annually growing income from dividend growth stocks that can be reasonably predicted independent of the headlines that stir the market into a frenzy.