Dr Pepper Snapple (DPS) Gave Me a 9.4% Raise
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Our dividend machine has been set on auto pilot and is always at work growing our income.
While we are busy investing new dollars into the market every month … the shares we already own are working hard too. For example, over half of the stocks we own are set to reinvest dividends back into additional shares of stock.
So instead of spending our dividend income, we have been taking advantage of compounding our earnings through reinvestment.
In addition to reinvesting our dividends, the companies we own are constantly (about once per year) increasing their payout too. One of the characteristics we look for when picking stocks is to find companies that historically raise dividends once a year.
As a dividend growth investor, this makes me a happy investor when we get these raises. They are an increase to our growing dividend income stream.
And the best part is that 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 Dr Pepper Snapple (DPS).
DPS Shareholders Get a 9.4% Raise
Dr Pepper Snapple (DPS) recently announced an annual dividend increase. The company has been consistently raising dividends for the past 7+ years.
While they don’t have the long track record of annual increases like some companies, Dr Pepper Snapple is well on their way to becoming a solid dividend growth stock.
Company shareholders will now receive $0.58 in quarterly dividends for each share they own … instead of $0.53 paid previously. This increase meets our desired dividend growth rate of well over 6%.
The latest increase bumps the annual dividend for DPS up to $2.32 per share compared to $2.20 last year.
Overall, that is a 9.43% increase in dividend income!
How Much Extra Income?
We currently only own 1.2 shares of DPS in our Money Sprout Index. We originally setup a monthly investment plan through our LOYAL3 account for $25. We decided to stop investing in this company after 4 months for a $100 total investment.
This latest dividend increase has pushed our 12 month forward dividend income for DPS up to $2.32, compared to $2.12 last year.
That is an annual dividend income increase of $0.24
While very small, this is another reminder that our dividend income stream is constantly growing without any extra work from us.
Over the past several weeks, we have seen several other dividend increases – Archer Daniels Midland (ADM), Realty Income Corp (O), Cincinnati Financial, Norfolk Southern, Sysco Corp, and Consolidated Edison (ED).
Whether they are large or small, all of these increases can really add up over the months and years.
With this latest increase by Dr Pepper Snapple, along with recent stock purchases and dividend reinvestment … our annualized forward dividend income has risen to $2,285.03.
Dividend Growth for DPS
We have owned shares of Dr Pepper Snapple for about 2.5 years now. The company has consistently been raising dividends at a high growth rate since our first purchase back in 2014.
Overall, the company has done a great job with dividend growth.
Take a look at the annual dividend payments since 2012 –
- 2012 – $1.34
- 2013 – $1.48
- 2014 – $1.61
- 2015 – $1.85
- 2016 – $2.07
- 2017 – $2.27 (projected)
Note – The 2017 dividend has been prorated to reflect a dividend increase during the year.
As you can tell from the numbers above, DPS 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. Dr Pepper Snapple 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 Dr Pepper Snapple –
- 1 Year DGR – 9.66% (2016 to 2017)
- 3 Year DGR – 12.15% (2014 to 2017)
- 5 Year DGR – 11.14% (2012 to 2017)
Overall, the dividend growth of the company has been very close to double digits – which is what I love to see!
Dr Pepper Snapple – Buy, Sell, or Hold?
We started buying shares of Dr Pepper Snapple back in October of 2014 from our LOYAL3 account.
Since that time, we have earned $3.06 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 DPS shares, we have used our dividends to fund other purchases.
Here are a few stats from over the years of buying stock in Dr Pepper Snapple –
- Total Investment – $100.00
- Shares Purchased – 1.197
- Dividends Earned – $3.06
- DRiP Shares – 0.000
At the time of this writing, DPS meets MOST of our stock screen criteria based on the following metrics –
- Current Yield – 2.32%
- Payout Ratio – 45.89%
- P/E Ratio – 19.74
The company meets all of the criteria that we look for when picking stocks – except the number of consecutive years raising dividends (which is 10). However, the company does have a current yield >= 2%, payout ratio <= 60%, PE under 20, and DGR's > 6%.
Based on all of this, we have recently started our monthly investment for DPS again from our LOYAL3 account. Starting in February, we will begin investing $25 per month in partial shares of the company.
That isn’t a huge investment, but it gives us an opportunity to add to our current position and take advantage of awesome dividend growth!
Full Disclosure – At the time of this writing, we owned shares in the following stocks noted in this post – ADM, CINF, DPS, 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.