It's Raining Dividends!

I don't mind rain, especially when it's my favorite type of rain "The Dividend Rain".

The dividend rainy season starts each quarter when most companies announce quarterly reports and dividend payouts. The dividend rain increases in intensity and volume as more and more companies, announces their dividends, with many increasing their dividend payments.

The season normally ends with one or two lightning bolts of a few big dividend increases and payments. In this post, I will show you what my dividend rain is made of.

If you look closely at the above picture, you will see there is an important information hidden in my dividend rain animation. It's the chart of annual dividend growth data for each stock that I own in my portfolio.

The chart shows five years worth of dividend growth for each company. The companies that have increased the dividend most are concentrated on the left side of the chart. This is where I get most of my dividend rain as I like to invest more in companies that pay growing dividends each year and have the highest dividend growth rate.

While the ones that have tiny dividend growth are shown on the right side of the chart. As you can see, there is hardly any rain on the right side. It doesn't mean they are bad stocks, they just don't grow dividends as much as the other stocks, but they tend to have higher current yields. Most utility and telecom stocks fall into this category.

Dividend growth is the cornerstone of my investment strategy, as it helps me increase my dividend cash flow in retirement without requiring a whole lot of new capital. Also, companies that increase dividends regularly, generally have a much sound balance sheets and thriving businesses than the ones that don't pay or increase dividends regularly.

History has shown, high dividend growth correlates to higher stock price appreciation over time. It makes sense since dividend growth can only happen if earnings and cash flows are growing as well. Growing earnings will make the stock price go higher.

To see which companies have the highest dividend growth, let's look at them by sector.

Click on the chart to make it bigger

From the chart above, we can see some of the largest dividend growth stocks are in Consumer Discretionary, Energy, Industrial, and Technology sectors. While Consumer Staples, Healthcare, and REITs are somewhere in the middle of the dividend growth spectrum. Utilities and Telecoms have the smallest dividend growth of all the stocks I own.

The Consumer Discretionary sector has some of the most consistently growing dividends, despite the retail turmoil.

All three of my stocks (VFC, TGT, and KSS) have double or high single digit dividend growth for the past five years. VFC is a clear winner in both dividend growth and price appreciation with TGT and KSS not too far behind.

Cons. Discretionary Dividend Growth vs. Dividend Yield

VLO is the towering winner in the Energy sector, when it comes to dividend growth. Whereas ENB comes in a respectable second, and CVX barely makes it to the dividend growth race.

If I were to invest more money in the energy sector, I would put new money in either VLO or ENB or maybe both.

CVX can barely keep the dividend growth streak going to keep its dividend aristocrat status intact. I'm thinking about divesting after ex-div date and using the proceeds to buy more of ENB and VLO.

Energy Dividend Growth vs. Dividend Yield

The Industrial sector has some of the highest dividend growth stocks, starting with BA, CMI, LMT, and ETN.

Shareholders in BA, CMI, and LMT have not only done very well in dividend growth, but have also enjoyed double digit price appreciation.

The current yields in this sector are relatively low, but the dividend growth and price appreciation have far exceeded investor's expectations in total returns.

Industrials Dividend Growth vs. Dividend Yield

The Technology sector is one of my favorite as I've spent most of my adult life working in this sector. It is also one of the best performing sectors in the stock market this year.

Four out of five of my technology stocks have stellar dividend growth with QCOM the winner and CSCO and MSFT right behind it.

INTC is the lagger in this group; however, the stock price has appreciated considerably higher recently. It is also one of my oldest stocks with an unrealized capital gains of 221% (as of today's stock price). So, I'm not complaining!

Technology Dividend Growth vs. Dividend Yield

The Telecoms and Utilities are the laggers when it comes to dividend growth rates; however, they do offer much higher current yields.

Both T and VZ have similar 2-3% annual dividend growth rate, but have a current dividend yield in upwards of 5-6%.

D is the clear winner in utilities with an average 8% dividend growth per year.

Whereas PPL is falling behind in dividend growth, it has recently started to grow its dividend by 4% and management has promised to keep increasing it by 4% for the next few years.

Telecoms and Utilities Dividend Growth vs. Dividend Yield

As for other sectors such as REITs, Financials, and Healthcare, they all fall in the middle of my dividend growth spectrum with REITs paying the highest current yield, but relatively lower dividend growth rates.

There are always outliers in each sector and why I like to chart out all my dividend growth stocks by sector. It helps me see how each stock's dividend growth is doing relative to other stocks in the sector. I then decide where I should be investing next or even divesting in the case of slowing dividend growth.

Hope you enjoyed reading or at least looking at this post, as always I appreciate any comments or feedback.

May the Dividend Rain continue forever and ever for all of us DGI'ers. Happy Investing!!!

Disclaimer: Author of this article is not a licensed/registered financial or investment adviser and does not provide investment advice. Any mention of stock names/tickers in this article or website is not a recommendation to buy or sell. Please do your own due diligence before buying any stocks. This article is for informational and entertainment purposes only. Full disclaimer can be read here: Full Disclaimer


  1. You have out done yourself again Mr. ATM. Gosh. Very cool. I take one very important point from your article "dividend growth is the corner stone of my investment strategy". I could not agree more. The one struggle I have (similar to many DGI's) is balancing current yield with future growth. I have usually had my best success with moderate yields that grow over time. The big current yields are so enticing, but they sometimes burn me. I find the middle of your graph works so well for me (eg. O, LMT, D, CMI) to name a few. You and I definitely speak the same language when it come to dividend stocks. Tom

    1. Thank you very much Tom : )

      Dividend growth is so beautiful when you look at it over multiple years. D really sticks out in the utility sector, I love it how consistent its dividend growth has been over the past five years, like a clockwork.

      Every time I'm enticed over a high yield, I look at this chart and see what the div growth looks like. I'll take a 5% yield with a 2-3% growth as long as the company continues to grow dividends. Many of the REITs and some utilities fall under this category.

      Take care and thank you again for commenting : )

  2. I enjoyed the graphic so much I had to enlarge it on my 27inch screen. You outdo yourself every time my friend!

    I do have a question. What was your investment strategy regarding your early retirement? Did you invest heavily into your retirement funds or did you invest more into taxable accounts with the idea that you would be retiring early at a younger age? If you have a post detailing that, you can just give me a link so you don't have to rehash it here.

    Thanks friend!

    1. Thank you very much DS for the kind words. The div growth chart by sector really helps me figure out where to invest next to get the most return. I like to put new capital in stocks that are growing dividends rather than shrinking (w/ few exceptions).

      To answer your question, I’ve written a bit about it here in my Business Plan post regarding how I invest:

      About nine years ago, I had an epiphany moment at work, when I realized that my job is not secure or I may get tired of it someday, and therefore, I must find a way to become financially independent. So, it wasn't about early retirement at first, but rather about achieving financial freedom.

      That got me started on the FI journey. BTW, at the time I wasn’t even aware of FIRE concept or any blogs talking about this stuff. I had to learn and figure it out on my own.
      I wanted to take a balanced approach between paying off mortgage and increasing dividend income, rather than choosing one or the other. While keeping our expenses to the minimum, we also refinanced our home a few times to take advantage of low interest rates and get the mortgage payments down, which reduced our monthly expenses.

      Before going all in the investments, we built our emergency fund to cover at least one year of expenses, and only after that we focused on paying off the mortgage and increasing dividend income in taxable accounts.

      I was fortunate enough to get annual bonuses that I would put towards paying off mortgage while using a big portion (probably about 70%) of my paycheck into stock investments. It wasn’t easy, but we did it and had to sacrifice a bit.

      It worked out pretty well for us as we got our mortgage paid off about the same time as we reached enough dividend cash flow to cover our expenses (reached our FI goal).

      As for retirement accounts, I have always maxed out my 401K and HSA contributions when I was getting a paycheck. I kept them invested in low cost dividend paying index funds with dividends reinvested.

      We don’t plan on using our retirement funds for another 20 some years, so we just let them grow while reinvesting dividends, and keep them on auto-pilot.

      So, yes I did invest heavily in taxable accounts, but at the same time kept 401K and HSA contributions to the max, while paying off mortgage and keeping expenses on the low side. I call it a multi-dimensional approach to FIRE.

      Hope, I answered your question and thanks again for your comment friend! : )

  3. You sure did answer the question, in wonderful detail. I really appreciate it! I'll likely have more questions down the road as I love to learn from those that have been there and done that! Thanks again.

  4. Thanks for sharing the cool dividend graphics, Mr ATM! Especially the top one with the highest dividend increasers on the left. It really provides great insight on why dividend growth is such an important component of long term portfolios. With the exception of one of my REITS, my entire portfolio is based on dividend growth stocks. Thanks for sharing the sector break down as well. You've got some great picks included here. And I enjoyed reading your FI story to Mr DS. Hope you're having a great week!

    1. Glad you liked the graphics and charts. Thanks for stopping by and for the comment. Take care!

  5. Mr. ATM, I think this is one of my favorite graphical representations that you've done. I even like it better than the dividend radar.

    1. Oh boy! I've really raised the bar for myself now : )

      Thanks for stopping by DP and take care.

  6. I like the layout of this and how its ordered with the sectors. Great visual representation. Great explanations as well. Thanks for sharing.

    1. Glad you liked it Daze and thank you for the nice compliment.

  7. Those are some wicked cool animations, truly unique Mr. ATM! Thanks for sharing your visualisations.

    1. Glad you liked it Mr. Robot and thanks for stopping by.

  8. Hi Mr. ATM,
    Stock research question for you when you have a chance. As I try to improve my research, do you have a preferred source for analyst projected earnings per share estimates for the individual companies that you follow? I prefer the company's forward guidance if they provide it and I can find it on their investor website. Not all provide it though, then I rely on analysts. Tom

    1. Hi Tom,
      Yes, I use the Forecasting Tool in FastGraphs for estimates as it gives me a nice graphical view of forward earnings.

      The tool uses publicly available data from Yahoo Finance. Here is the link for say GE eps/rev estimates:

      You can enter stock ticker in the 'Quote Lookup' box of whatever company you want to see estimates and it will give you that data. It also tells you No. of Analysts who gave the estimate.

      Even though I use FastGraphs forecasting tool, I still go to Yahoo Finance link to get estimates on revenues.

      Hope this helps.

  9. Sure does. Thanks ATM and hope you are having a good weekend. Tom


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