Dividend Investing At Work - May 2015

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Includes: NTIOF, PEP, PWCDF, TU
by: The Dividend Engineer

Dividend investing, or should I say, dividend growth investing, is about buying stocks paying growing dividends, and then collecting these growing dividends. When you think about it, dividend growth investing is extremely simple. Well, the devil is always in the details but that's for another day…

Sometimes, I think this simplicity causes many investors to think that it cannot be that simple to generate wealth. Well, it is. Case in point, last month, another four of my dividend stocks announced dividend increases. Though buying dividend stocks is one of the most enjoyable parts of dividend growth investing, watching your carefully selected stocks announcing dividend increases is almost as enjoyable, if not more.

So, let's take a quick look at which stocks in my dividend portfolio rewarded me with dividend increases.

PepsiCo Inc.

On May 5, PepsiCo (NYSE:PEP) increased its quarterly dividend by 7.3%, from $0.6550 per share to $0.7025 per share. For 43 consecutive years in a row now, Pepsi has increases its quarterly dividend. A dividend champion for almost 20 years now, Pepsi is fast approaching the status of dividend king, that is 50 consecutive years of dividend increases.

This most recent increase is lower than the compound annual growth rate over the last decade, which is 10.74%. Still, a 7.3% increase is respectable for a company this size.

Telus Corp.

On May 7, Telus (TSX: T, NYSE: TU) increased its quarterly dividend by 5.0%, from CA$0.40 per share to CA$0.42 per share.

Telus is a major Canadian provider of telecommunication services. Despite being mostly present in the Western part of Canada, Telus also has operations in the East.

Though a 5.0% increase might not look spectacular, it is worth noting that Telus usually increases its quarterly dividend twice a year, in May and in November. So, over the last 12 months, Telus's dividend has increased by 10.5%.

For a company actually yielding about 4%, a 10% annual increase for a telco is a sweet deal. If you don't know Telus, you should definitely take a look at it.

Power Corporation of Canada

On May 15, Power Corporation (TSX: POW, OTCPK:PWCDF) increased its quarterly dividend by 7.3%, from CA$0.29 per share to CA$0.3113 per share. It was about time.

I bought shares of Power Corporation in March 2009. If you recall, March 2009 was the darkest point during the last recession. At that time, Power Corporation, a financial conglomerate, was yielding about 7%.

Though I locked in a nice yield in 2009, Power Corporation didn't increase its quarterly dividend for the next 6 years. That's a long time to wait. Still, in retrospect, I think I made the right choice to keep Power Corporation in my portfolio.

Unless you are Canadian, chances are, you don't know Power Corporation. As mentioned above, Power Corporation is a massive financial conglomerate with controlling stakes in IGM Financial Inc. (TSX: IGM, OTCPK:IGIFF), a provider of mutual funds and other retirement products, and Great-West Lifeco Inc. (TSX: GWO, OTCPK:GWLIF), an insurance company. Through other subsidiaries, Power Corporation also owns stakes in other publicly traded companies.

Power Corporation has sometimes been compared to Berkshire Hathaway (NYSE:BRK.A) (NYSE:BRK.B), the conglomerate run by Warren Buffett. I would not go that far. But both companies share a common focus on financial and particularly insurance companies. If you are looking for a stable company capable of generating reasonable returns, you should take a look at Power Corporation.

National Bank of Canada

On May 27, National Bank of Canada (TSX: NA, OTCPK:NTIOF) increased its quarterly dividend by 4.0%, from CA$0.50 per share to CA$0.52 per share.

Like Telus above, National Bank of Canada announced a relatively small dividend increase. 4% is nothing to brag about. But when you realize that like Telus, and most Canadian banks for that matter, National Bank of Canada usually increases its quarterly dividend twice a year, in May and in November, a 4% increase is not that bad.

In that sense, over the last year, National Bank of Canada effectively increased its quarterly dividend by a healthier 8.3%, from CA$0.48 per share to CA$0.52 per share. Add to that a current yield around 4.2% and you have a great dividend stock.

Final Thoughts

Dividend growth investing is simple. Not easy. Simple. Dividend growth investing is about buying stocks paying growing dividends, and then collecting these growing dividends.

The tough part is finding properly valued dividend stocks and buying them. The easy part, is collecting the growing dividend. If you can get over the tough part, which is fun, you will get to the easy part, which is the best - collecting growing dividends.

Keep investing, keep collecting!

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.