Sysco (SYY) Gave Us a Raise with Annual Dividend Increase

We may earn money or products from the companies mentioned in this post.

As I woke up this morning and checked out the latest financial news … I was welcomed with a nice little Christmas bonus. A raise of over 9% to our passive income stream.

This increase to our income wasn’t from my full time job. Instead, we got a raise that was passive and we didn’t have to do anything to get it.

We received this raise in the form of a dividend increase from one of the 33 stocks we currently own.

Now I should point out that this raise was rather small compared to some of the increases we get … but who can complain with increasing their income by 9%?

The most recent dividend increase from a stock we own was from Sysco Corporation (SYY).

SYY Shareholders Get a 9.1% Raise

Sysco Corporation (SYY) recently announced an annual dividend increase. The company has been consistently raising dividends for the past 47+ years. That is so cool … a company that has been handing out raises for almost 5 decades!

Company shareholders will now receive $0.36 in quarterly dividends for each share they own … instead of $0.33 paid previously. This increase meets our desired dividend growth rate of over 6% … which is awesome!

The latest increase bumps the annual dividend for SYY up to $1.44 per share compared to $1.32 just last quarter.

Overall, that is a 9.1% increase in dividend income.

This is a welcomed increase for the company that is one of the first dividend stocks we ever purchased.

How Much Extra Income?

We currently only own 32.206 shares of SYY in our taxable Money Sprout Index. We purchased 25 shares in the company almost 8 years ago, back in December 2009.

Sysco Corporation has been consistently increasing dividends each year at a steady pace since we purchased our first share.

This latest dividend increase has pushed our 12 month forward dividend income for SYY up to $46.38, compared to $42.51 last quarter.

That is an annual dividend income increase of $3.86. That might not seem like a lot, but combined with other increases from stocks we own … these small bumps really start to add up.

Whether they are large or small, all of these increases can really add up over the months and years.

With this latest increase by Sysco Corporation, along with recent stock purchases, dividend reinvestment, and other company announced increases … our annualized forward dividend income has risen to $2,808.19.

Dividend Growth for SYY

We have owned shares of Sysco Corporation (SYY) for almost 8 years now. Our first and only purchase was 25 shares back in December 2009. We have added an additional 7.206 shares through dividend reinvestment in our Fidelity brokerage account.

As mentioned earlier, the company has been raising dividends for the past 47+ years.

Take a look at the annual dividend payments since 2009 to a projected 2018 annual dividend –

  • 2009 – $0.96
  • 2010 – $1.00
  • 2011 – $1.04
  • 2012 – $1.08
  • 2013 – $1.12
  • 2014 – $1.16
  • 2015 – $1.20
  • 2016 – $1.24
  • 2017 – $1.32
  • 2018 – $1.44 (projected)

Note – The 2018 dividend has been prorated to reflect a dividend increase at the beginning of next year.

As you can tell from the numbers above, SYY dividends have been raised consistently over the past several years. The good news is the growth rate has accelerated a bit over the last 2 years.

Typically, we look for stocks with a 5-year or 10-year dividend growth rate (DGR) of 6% or higher. Sysco Corp. doesn’t technically hit that target but has been consistent in their raises … which is also something we look for and let’s us sleep at night knowing we are increasing our income.

Here are a few average growth rates for shares of Sysco Corporation

  • 1 Year DGR – 9.09% (2017 to 2018)
  • 3 Year DGR – 6.29% (2015 to 2018)
  • 5 Year DGR – 5.18% (2013 to 2018)
  • 9 Year DGR – 4.62% (2009 to 2018)

Note – I included the 9 year DGR in this scenario as that is how long we will have owned the stock by the end of 2018. This assumes the most recently quarterly increase will be extended for the remainder of 2018.

Sysco Corporation – Buy, Sell, or Hold?

As stated earlier, we bought 25 shares of Sysco Corporation (SYY) back in December 2009 as a lump sum investment. Since these shares are held in our Fidelity account, we have been able to add another 7.206 shares from DRiP.

Since buying our first shares back in 2009, we have earned $263.40 in dividends from Sysco Corporation.

Here are a few stats from owning stock in Sysco Corporation

  • Total Investment – $723.45
  • Shares Purchased – 25.000
  • Dividends Earned – $263.40
  • DRiP Shares – 7.206

To date, we have earned back 36.41% of our overall investment in the company … just from dividends.

We are also currently earning a 6.41% yield on cost on our shares of SYY.

Owning shares of Sysco Corporation over the past 8 years has been great. This stock has been producing sustainable income each year and continues to grow. And even though owning this company has been great … it doesn’t mean we are actively buying stock in the company.

At the time of this writing, SYY meets SOME of our stock screen criteria based on the following metrics –

  • Current Yield – 2.62%
  • Payout Ratio – 62.50%
  • P/E Ratio – 26.39

The company meets one of the criteria that we look for when picking stocks … which is a current yield >= 2%. However, several other factors don’t meet our criteria for picking stocks.

The payout ratio is slightly above 60% and the PE ratio is above 20. In addition, the 5-yr dividend growth rate is under 6% … although that will probably change in the next couple of years.

Based on those metrics, we feel there are better dividend growth opportunities out there at this time.

Based on all of this, we have SYY as a solid HOLD for now. As long as the company continues to raise or at least maintain the current dividend … we will hold our shares. However, if the company makes a dividend cut … then we will sell our shares and reinvest the assets into a better dividend stock.

For now … we hold our shares and will continue to collect $46+ a year from the company!

Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – SYY. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.

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