I’ve mentioned a few times recently how great 2018 was for dividend raises.  In my December Monthly Dividend Income report, I showed that my Portfolio’s 2018 dividend raises netted me nearly $924 in additional forward dividend income.  But what was the growth in percentage terms, and how did this compare to previous years?  And which raises from which stocks delivered the biggest impact for my Portfolio?  We’ll get the answers to these questions right here, in what is now my annual look at my Portfolio’s Weighted Dividend Growth.

This is only the 2nd year I’ve done this.  I started this last year after reading a Dividend Growth Checkup post from JC over at Passive Income Pursuit.  I was inspired to go back and calculate my weighted dividend growth for 2015, 2016 and 2017 and share the results in this post.

This time I’ll only being calculating the weighted dividend growth for 2018, but I’ll put it next to my results from previous years for comparison.  I’ll also highlight a few interesting nuggets of information along the way.

Let’s get started…

 

Weighted Dividend Growth Calculation

To determine the weighted growth percentage contributed by an individual stock, its dividend growth percentage for the year is multiplied by the dividend amount that company paid me for the year, divided by the total dividends for the portfolio for the year, or…

Div Growth % for Stock * (Div Paid by Stock / Div Paid by Portfolio)

Each of these individual dividend growth percentages is then added up to obtain the weighted dividend growth percentage for the entire portfolio of stocks.

Note – I did not include special dividends in the weighted dividend growth calculations, as these are usually a one-time occurrence, and they skew the percentages up and then down from year-to-year.  Main Street Capital (MAIN) was my only stock in 2018 to pay special dividends.

 

Weighted Dividend Growth for my Portfolio

First, here’s some info to help understand what you see in the first table below.  Tickers in blue are for stocks that exited my Portfolio in 2018.  Tickers in red are for stocks added to my Portfolio in 2018.  Due to these stocks not having a full year of participation in my Portfolio, their contributions tend to be muted.

The stocks are listed in order of Weighted Dividend Growth, best to worst, so that you can quickly compare their contributions to my total.

In the middle column, I show the Dividend Growth for each stock.  This growth percentage is for the change in 2017 total dividends paid to 2018 total dividends paid, as opposed to the percentage of the dividend raise the company provided in 2018.  The size of 2017 and 2018 dividend raises, and the timing of the 2018 dividend raise, results in the difference between these two numbers.

 

Review of 2018 Results

First off… Wow!  11.60%!  This 2018 number eclipses any of my weighted dividend growth numbers in the previous years, and blows away my hope for at least 7% dividend growth for my Portfolio as a whole.

You can see that Abbvie (ABBV) provided the biggest contribution to my 2018 Weighted Dividend Growth, at 1.17%.  This was the only stock to cross the 1% threshold.  ABBV provided two raises in 2018.  These raises, plus the fact that ABBV delivers a substantial portion of my Portfolio’s annual dividend income led to this result.

Other strong performers included T. Rowe Price (TROW), Union Pacific (UNP), Aflac (AFL), Blackrock (BLK) Fastenal (FAST) and Air Lease (AL).  All were aided by strong dividend growth percentages.  Qualcomm (QCOM) was near the top of the list as well, despite a much smaller 2018 dividend growth, since it provides a large percentage of my dividend income relative to other holdings.

Each of the new additions in my Portfolio (red tickers) delivered strong dividend growth in 2018, while the positions removed (blue tickers) had much smaller dividend growth.  Finding stocks that provide good dividend growth is always a factor in my Portfolio adjustments, and it should help my Portfolio’s weighted dividend growth stay elevated in future years.

You’ll see that I had 5 stocks showing 0% weighted dividend growth.  Nexstar Media Group (NXST) had strong dividend growth in 2018, but the 2018 raise occurred before I purchased the stock, so I manually adjusted the number to $0 (it would have been 0.33%).  CVS Health (CVS) and Hanesbrands (HBI) did not provide dividend increases in 2018, and thus their weighted dividend growth is correctly calculated as 0%.  New Portfolio additions JPMorgan Chase & Co. (JPM) and 3M Co. (MMM) had nice dividend growth in 2018, but I did not get to capture any of this since I purchased both late in 2018, and neither paid a dividend to me in 2018.  I look forward to capturing their dividend growth in 2019 though.

As expected, nearly all of my REITs and my lone BDC, delivered small dividend growth relative to my other holdings.  My REITs include Realty Income (O), Omega Healthcare Investors (OHI), W.P. Carey (WPC), Crown Castle International (CCI).  The BDC is MAIN.  CCI bucked the dividend growth trend with nearly 9.62% dividend growth, leading to the best weighted dividend growth (0.26%) for these REITs and BDC.

Stocks that I’d like to see better dividend growth from include Procter & Gamble (PG), Target (TGT) and Cardinal Health (CAH), which all came in the 3%-4% range.  Given the size of my PG stake compared to the other two stocks, the weighted dividend growth for PG came in the best of the three.  However, it was nothing to get excited about at 0.15%

 

Comparison of 2018 Results to Previous Years

In the next table below, I show the weighted dividend growth from 2018 against those calculated from previous years.  Tickers are now in alphabetical order.  Tickers in blue are for stocks that I no longer own.  These stocks have weighted dividend growth cells that are empty and shaded blue once they no longer contributed to my results.  Cells that are empty and shaded gray are for stocks that I didn’t own, and thus did not contribute to the weighted dividend growth calculation in that year.

Let’s see the weighted dividend growth for my Portfolio in each of the past 4 years…

 

Looking at the totals, the dividend growth for my Portfolio came in at 10.24% in 2015, 6.94% in 2016, 8.62% in 2017, and 11.60% in 2018.

These are all numbers I like to see, but 2018 was truly amazing, exceeding my expectations by a wide amount.

Note that I found an error in my 2017 calculation from last year (related to my WPC dividends), and thus I now show my 2017 weighted dividend growth as 8.62%, instead of 8.64%.

 

Summary

2018 did not disappoint when it came dividend growth for my Portfolio companies.  This resulted in my best-ever weighted dividend growth calculation at 11.60%.  I was happy to see that the growth I thought I was seeing in those dividend raises resulted in a terrific weighted dividend growth.

My Portfolio continues to lean a bit more toward growth than yield, and thus the companies in my Portfolio tend to offer more aggressive dividend growth increases than a slower-growing company offering a high yield in exchange.  I believe this continues to be a factor in my excellent weighted dividend growth percentages.

Don’t forget that even low yielding stocks can have a significant contribution to your portfolio’s overall dividend growth if they can offer large dividend growth while providing a decent portion of your overall dividend income due to their large weighting in your portfolio.

 

Did you calculate the weighted dividend growth for your portfolio?  If so, which stocks packed the most punch for you in 2018?  Please share in the comments!