Another Reason to Own Archer Daniels Midland (ADM)
We may earn money or products from the companies mentioned in this post.
It seems like every time I turn around these days, there is another company announcing a dividend increase.
There have been several increases recently from stocks that we own shares in. As a dividend growth investor, there is nothing that makes me happier then hearing a company we own announce a raise.
I consider these dividend increases a raise. They are an increase to our growing dividend income stream. And most of the time, we get these raises every single year.
We don’t really do any extra work for these raises. Instead, we get them because we invest in well managed corporations that pay back their shareholders.
And we hold onto our shares in these companies for years and years. All the while letting our dividends grow and compound.
The most recent dividend increase from a stock we own was from Archer Daniels Midland (ADM).
ADM Shareholders Get a 6.7% Raise
Archer Daniels Midland recently announced an annual dividend increase. The company has been consistently raising annual dividends for over the past 40 years!
Company shareholders will now receive $0.32 in quarterly dividends for each share they own … instead of $0.30 paid previously. This increase meets our desired dividend growth rate of at least 6%.
The latest increase bumps the annual dividend for ADM up to $1.28 per share compared to $1.20 last year.
Overall, that is a 6.67% increase in dividend income.
How Much Extra Income?
We currently own 45 shares of ADM in our Money Sprout Index.
This latest dividend increase has pushed our 12 month forward dividend income for ADM up to $57.60, compared to $54.00 last year.
That is an annual dividend income increase of $3.60
This is another reminder that our dividend income stream is constantly growing without any extra work from us.
Whether they are large or small, all of these increases can really add up over the months and years.
With this latest increase by Archer Daniels Midland, along with recent stock purchases and dividend reinvestment … our annualized forward dividend income has risen to $2,284.36.
Dividend Growth for ADM
We have owned shares of Archer Daniels Midland for about one year now. This will mark the first raise that we have received from the company as shareholders.
Overall, the company has done a good job with dividend growth … which is one of the reasons why we purchased our shares last spring.
Take a look at the annual dividend payments since 2012 –
- 2012 – $0.70
- 2013 – $0.76
- 2014 – $0.96
- 2015 – $1.12
- 2016 – $1.20
- 2017 – $1.28 (projected)
Note – The 2017 dividend has been adjusted to reflect a projected dividend over the entire year.
As you can tell from the numbers above, ADM dividends have been raised consistently over the past several years with healthy growth.
Typically, we look for stocks with a 5-year or 10-year dividend growth rate (DGR) of 6% or higher. Archer Daniels Midland has been a good fit for our portfolio recently based on DGR’s above 6% … along with several other criteria.
Here are a few average growth rates for shares of Archer Daniels Midland –
- 1 Year DGR – 6.67% (2016 to 2017)
- 3 Year DGR – 15.24% (2014 to 2017)
- 5 Year DGR – 13.07% (2012 to 2017)
Overall, the dividend growth of the company has been in the double digits – except for the past 2 years. However, with growth rates still above 6% … we still like how this company is growing their dividend.
Archer Daniels Midland – Buy, Sell, or Hold?
We started buying shares of Archer Daniels Midland back in April of 2016.
Since that time, we have earned $28.50 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 ADM shares, we have used our dividends to fund other purchases.
Here are a few stats from over the years of buying stock in Archer Daniels Midland –
- Total Investment – $1,804.14
- Shares Purchased – 45.00
- Dividends Earned – $28.50
- DRiP Shares – 0.00
At the time of this writing, ADM meets our stock screen criteria based on the following metrics –
- Current Yield – 2.87%
- Payout Ratio – 45.04%
- P/E Ratio – 17.61
The company meets all of the criteria that we look for when picking stocks. A current yield >= 2%, payout ratio <= 60%, PE under 20, and DGR's > 6%.
Based on all of this, we have ADM on our current list of stocks to watch. When funds allow, we will likely add to our current position over the next couple of months.
In the meantime, we will enjoy our most recent raise the company has provided!
Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – ADM, CINF, ED, NSC, O, and SYY. The material above is not a recommendation to buy. Please do your own research on a company before deciding to invest.