Best Buy (BBY) Gives Shareholders a 21.4% Raise

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Wouldn’t it be great to sit back and earn a solid income from not doing much work at all?

Instead of spending your time at work earning an income … you could be spending time with people you care about doing the things you love.

That is why I feel so strongly about building sustainable income streams that can help provide for my family.

One of my favorite sustainable income streams … is to invest in dividend paying stocks.

Provided you can select the top dividend growth companies … your income should grow year after year.

One of the easiest ways that income will grow, is through annual dividend increases given out by the companies you own. Just in the past month, our portfolio of stocks has seen companies raise dividends by 2% and some by over 20%!

The most recent dividend increase (or raise) from a stock we own was from Best Buy (BBY).

BBY Shareholders Get a 21.4% Raise

Best Buy (BBY) recently announced an annual dividend increase. The company has been consistently raising annual dividends for over 10+ years … which puts them on the list of Dividend Contenders!

Company shareholders will now receive $0.34 in quarterly dividends for each share they own … instead of $0.28 paid last quarter. This increase comes well above our desired dividend growth rate of at least 6%.

The latest increase bumps the annual dividend for BBY up to $1.36 per share compared to $1.12 last year.

Overall, that is a 21.4% increase in dividend income.

How Much Extra Income?

We currently own 1.11 shares of BBY in our Money Sprout Index.

This latest dividend increase has pushed our 12 month forward dividend income for BBY up to $1.52, compared to $1.25 last quarter.

That is an annual dividend income increase of $0.27 – (not much but it is an increase to our income).

Even though we increased our income by less than $1 a year, this is a reminder our dividend portfolio is constantly growing every single day … without any extra work from us..

With this latest increase by Best Buy, along with recent stock purchases and dividend reinvestment … our annualized forward dividend income has risen to $2,323.91.

Dividend Growth for BBY

We have owned shares of Best Buy for about 2 months … which isn’t long.

Overall, the company has shown the ability to grow their dividend at a very high rate recently.

Take a look at the annual dividend payments since 2012 –

  • 2012 – $0.66
  • 2013 – $0.68
  • 2014 – $0.72
  • 2015 – $0.92
  • 2016 – $1.12
  • 2017 – $1.36 (projected)

Note – The 2017 dividend has been adjusted to reflect the entire year.

As you can tell from the numbers above, BBY 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. Best Buy has been able to sustain a dividend growth rate above the 6% (or higher) that we look for in a stock.

Here are a few average growth rates for shares of Best Buy

  • 1 Year DGR – 21.43% (2016 to 2017)
  • 3 Year DGR – 23.65% (2014 to 2017)
  • 5 Year DGR – 15.97% (2012 to 2017)

Best Buy – Buy, Sell, or Hold?

We started buying shares of Best Buy just two months ago (February 2017).

Since that time, we have earned $0 in dividends from the company. Our first expected dividend payment will come later this month!

Note – We own BBY shares in our LOYAL3 account and therefore won’t have the option for DRiP. We plan to reinvest our BBY dividends back into additional shares of another stock.

Here are a few stats from the past two months of buying stock in Best Buy

  • Total Investment – $50.00
  • Shares Purchased – 1.115
  • Dividends Earned – $0.00
  • DRiP Shares – 0.00

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

  • Current Yield – 2.54%
  • Payout Ratio – 34.46%
  • P/E Ratio – 13.58

The company meets the current yield requirement of being greater than (or equal) to 2%. In addition, the payout ratio is less than 60% and the P/E ratio is well under 20 – which we look for.

In addition to the metrics listed above, the company has been able to raise their dividend at a high rate over the past 5+ years.

Based on all of this, we have BBY as a slight BUY. The biggest hesitation I have with the company is that they are a retailer and will likely have heavy competition with online stores in the future.

We have a $25 monthly investment plan currently setup up for Best Buy through our LOYAL3 account. This gives us an opportunity to invest a few dollars in the company and take advantage of awesome dividend growth.

We also can dollar cost average since we are investing the same amount each month. And we don’t have to worry about paying any commissions or fees since we are using our LOYAL3 account.

Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – BBY. 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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