Hello everyone, I hope the new year is treating you well. My apologies on the long absence from the blog, it’s been way too long since I’ve written an update on the portfolio. This is the first post made on the site since September, so it feels great to get back in the saddle once again.
I keep hoping that I’ll find more time for writing on investments and my portfolio, but it’s becoming apparent that more limited time is my new reality. With a full-time job and three young kiddos at home, I’m finding that it’s not just the busyness of life that keeps increasing, but also the exhaustion at the end of the day from keeping up with it all. Maybe it has something to do with turning 40 in the fall; but those midnight writing sessions just don’t come as easy as they used to!
I got a nice surprise this afternoon when Polaris Industries Inc. $PII announced a 5.45% increase to the dividend by raising the quarterly payout from $0.55 to $0.58 per share.
Just yesterday I released my predictions for dividend increases in Q1, where I wrote this about my expectations for Polaris:
Polaris Industries Inc. (NYSE:PII) has really struggled the last year and saw earnings fall by nearly 50% in 2016. While they are expected to rebound in 2017, the payout ratio is well above the historical ~30% rate, which will likely lead to another minimal increase in the dividend. I am predicting a penny increase to $0.56, which is just 1.8% more than last year.
Needless to say, I am happy to see management step up and give a decent dividend boost despite the headwinds. It’s also good to hear management make a point to talk about the dividend, as it reinforces the fact that dividends are a top priority for the company.
This is what CEO and Chairman Scott Wine said in the press release (bolded by me):
“We are very proud of our 22-year history of increasing dividend payments. We have maintained a disciplined, consistent approach to returning cash to shareholders, and dividends remain one of the important ways we can deliver further value. We believe this most recent dividend increase underscores our confidence in Polaris’ future growth and profitability prospects, steady cash flow generation, and continued strong financial position.”
One of the great things I like about dividend growth investing is that by focusing on the dividend rather than the share price helps keep me from acting on emotion with my investments. It’s easy to throw in the towel during times like this when a company has a setback or two, sees earnings take a hit, and the share price suffers.
However, emotions of fear and dismay can cause one to sell out of a position at the worst time, often near the bottom before things turn around and shares head higher. This is something I personally struggle with, and am making a point of emphasis this year to limit turnover in my portfolio.
Polaris has certainly had its share of miss-steps over the last two years, and those coupled with a tough business climate has caused earnings to be cut in half. However, it deserves to be given a long leash considering its tremendous performance over the last two decades, which is why I continue to hold my shares.
Today’s announcement gives me some encouragement that I’m doing the right thing by doing so.
One of the more enjoyable aspects of dividend growth investing is being able to see my income grow on a consistent basis. Between the reinvestment of dividends and the organic growth produced by dividend increases, my portfolio income has been on a steady march higher since it was built in early 2013.
It’s a nice comfort knowing that my income will grow regardless of what the market is doing on a day to day, monthly, or quarterly basis. Even better, if the market does have a large correction, it actually works in my favor, as my dividends are reinvested at an even higher yield than they would have otherwise, further increasing my income.
Seeking Alpha contributor David Fish recently wrote a series of articles highlighting the Champions, Contenders, and Challengers that are expected to raise their dividends during the first quarter of 2017. This gave me the inspiration to take a closer look at the holdings in my portfolio, and see which ones are due to raise their payouts.
Between David’s list and my own tracking spreadsheet, I was able to find 11 companies that are likely to announce increases with their next declaration. Here they are, along with their recent dividend growth information:
I wrote up an article on Seeking Alpha providing my dividend growth expectations for each company, and my guess at the date that they will be announced.
If you are interested in seeing those predictions please follow the link below.