Genuine Parts Company (GPC) Gives Shareholders a 2.7% Raise
As long as you select the top dividend growth companies … there is a great chance your income stream will grow every year.
An investor can accelerate that growth by investing new money into more stocks and by reinvesting any dividends they may receive.
A dividend income stream can also grow on its own without any help. This growth comes from the companies that you own in the form of annual dividend increases.
I look forward to each and every dividend income increase that is announced for the 30+ stocks that we own.
The most recent dividend increase (or raise) from a stock we own was from Genuine Parts Company (GPC).
GPC Shareholders Get a 2.7% Raise
Genuine Parts (GPC) recently announced an annual dividend increase. The company has been consistently raising annual dividends for over the past 60+ years!
That is hard to imagine a company raising dividends year after year for that long of a time.
Company shareholders will now receive $0.675 in quarterly dividends for each share they own … instead of $0.658 paid last quarter. This increase comes well below our desired dividend growth rate of at least 6%.
The latest increase bumps the annual dividend for GPC up to $2.70 per share compared to $2.63 last year.
Overall, that is a 2.7% increase in dividend income.
How Much Extra Income?
We currently own 5.00 shares of GPC in our Money Sprout Index.
This latest dividend increase has pushed our 12 month forward dividend income for GPC up to $13.50, compared to $13.15 last year.
That is an annual dividend income increase of $0.35 – (not much but it is an increase to our income).
Despite an increase of less than $1 a year, this is another reminder that our dividend income stream is constantly growing every single day … without any extra work from us … no matter how large or small the increase.
With this latest increase by Genuine Parts, along with recent stock purchases and dividend reinvestment … our annualized forward dividend income has risen to $2,309.05.
Dividend Growth for GPC
We have owned shares of Genuine Parts for about 9 months … which isn’t very long.
Overall, the company has shown the ability to grow their dividend … but it appears that growth has slowed a bit recently.
Take a look at the annual dividend payments since 2012 –
- 2012 – $1.935
- 2013 – $2.150
- 2014 – $2.300
- 2015 – $2.420
- 2016 – $2.588
- 2017 – $2.683 (projected)
Note – The 2017 dividend has been adjusted to reflect the annual increase coming after the 1st quarter payout.
As you can tell from the numbers above, GPC dividends have been raised consistently over the past several years.
Typically, we look for stocks with a 5-year or 10-year dividend growth rate (DGR) of 6% or higher. Genuine Parts has been able to sustain a dividend growth rate but nowhere close to the 6% (or higher) that we look for in a stock.
Here are a few average growth rates for shares of Genuine Parts –
- 1 Year DGR – 3.65% (2016 to 2017)
- 3 Year DGR – 5.27% (2014 to 2017)
- 5 Year DGR – 6.78% (2012 to 2017)
Genuine Parts – Buy, Sell, or Hold?
We started buying shares of Genuine Parts back in May of 2016.
Since that time, we have earned $9.87 in dividends from the company. Since we own these shares in our Robinhood account, there is no option for DRiP – therefore no additional shares have been earned from dividends.
Note – Even though we don’t have DRiP for our GPC shares, we have used our dividends to fund other purchases.
Here are a few stats from the past year of buying stock in Genuine Parts –
- Total Investment – $480.30
- Shares Purchased – 5.000
- Dividends Earned – $9.87
- DRiP Shares – 0.00
At the time of this writing, GPC does NOT meet our stock screen criteria based on the following metrics –
- Current Yield – 2.82%
- Payout Ratio – 58.82%
- P/E Ratio – 20.85
The company meets the current yield requirement of being greater than (or equal) to 2%. In addition, the payout ratio is less than 60% … but is very close. The P/E ratio is just above 20 – which we look for.
In addition to a higher P/E, the dividend growth rate has slowed down. Factor that in with a payout ratio close to 60, and we feel there are better places to invest our money at this time.
Based on all of this, we have GPC as a solid HOLD. If at anytime, the company were to cut their dividend … we would sell our shares immediately.
Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – GPC. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.