S&P 500   4,191.98
DOW   33,426.63
QQQ   336.51
Mount Etna volcano erupts, raining ash on Catania, forcing flight suspension at local airport
This MMJ Stock Needs To Be At The Top Of Your Radar! (Ad)
China tells tech manufacturers to stop using Micron chips, stepping up feud with United States
Stock market today: Asian shares mostly rise despite worries about US debt talks
This MMJ Stock Needs To Be At The Top Of Your Radar! (Ad)
SpaceX launches two Saudi astronauts on private flight to space station
Civil rights groups warn tourists about Florida in wake of 'hostile' laws
Central Bank: “Final stage” beginning now (Ad)
South Korean, German leaders agree to cooperate on supply chains, North Korea
Animal rights activists protest octopus farm plans in Spain
S&P 500   4,191.98
DOW   33,426.63
QQQ   336.51
Mount Etna volcano erupts, raining ash on Catania, forcing flight suspension at local airport
This MMJ Stock Needs To Be At The Top Of Your Radar! (Ad)
China tells tech manufacturers to stop using Micron chips, stepping up feud with United States
Stock market today: Asian shares mostly rise despite worries about US debt talks
This MMJ Stock Needs To Be At The Top Of Your Radar! (Ad)
SpaceX launches two Saudi astronauts on private flight to space station
Civil rights groups warn tourists about Florida in wake of 'hostile' laws
Central Bank: “Final stage” beginning now (Ad)
South Korean, German leaders agree to cooperate on supply chains, North Korea
Animal rights activists protest octopus farm plans in Spain
S&P 500   4,191.98
DOW   33,426.63
QQQ   336.51
Mount Etna volcano erupts, raining ash on Catania, forcing flight suspension at local airport
This MMJ Stock Needs To Be At The Top Of Your Radar! (Ad)
China tells tech manufacturers to stop using Micron chips, stepping up feud with United States
Stock market today: Asian shares mostly rise despite worries about US debt talks
This MMJ Stock Needs To Be At The Top Of Your Radar! (Ad)
SpaceX launches two Saudi astronauts on private flight to space station
Civil rights groups warn tourists about Florida in wake of 'hostile' laws
Central Bank: “Final stage” beginning now (Ad)
South Korean, German leaders agree to cooperate on supply chains, North Korea
Animal rights activists protest octopus farm plans in Spain
S&P 500   4,191.98
DOW   33,426.63
QQQ   336.51
Mount Etna volcano erupts, raining ash on Catania, forcing flight suspension at local airport
This MMJ Stock Needs To Be At The Top Of Your Radar! (Ad)
China tells tech manufacturers to stop using Micron chips, stepping up feud with United States
Stock market today: Asian shares mostly rise despite worries about US debt talks
This MMJ Stock Needs To Be At The Top Of Your Radar! (Ad)
SpaceX launches two Saudi astronauts on private flight to space station
Civil rights groups warn tourists about Florida in wake of 'hostile' laws
Central Bank: “Final stage” beginning now (Ad)
South Korean, German leaders agree to cooperate on supply chains, North Korea
Animal rights activists protest octopus farm plans in Spain

Recent Dividend Increases

Below you will find a list of public companies, exchange traded funds (ETFs), and real-estate investment trusts (REITs) that have recently increased the amount of their dividend payments. Learn how to invest in stocks with increasing dividends.

MarketRank evaluates a company based on community opinion, dividend strength, institutional and insider ownership, earnings and valuation, and analysts forecasts.
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Analyst ConsensusUpgrade to All Access to use the All Ratings Filter
CompanyAnnouncement DateAmountPrevious AmountIncrease AmountYieldEx-DatePayable DateIndicator(s)
Seacoast Banking Co. of Florida stock logo
SBCF
Seacoast Banking Co. of Florida
5/21/2023$0.18$0.175.88%3.17%6/14/20236/30/2023
Nasdaq, Inc. stock logo
NDAQ
Nasdaq
5/21/2023$0.22$0.2010.00%1.58%6/15/20236/30/2023
Permian Basin Royalty Trust stock logo
PBT
Permian Basin Royalty Trust
5/19/2023$0.0440$0.027062.96%2.18%5/30/20236/14/2023News Coverage
Positive News
LyondellBasell Industries stock logo
LYB
LyondellBasell Industries
5/19/2023$1.25$1.195.04%5.55%5/26/20236/6/2023
AAON, Inc. stock logo
AAON
AAON
5/18/2023$0.12$0.1020.00%0.53%6/8/20236/30/2023
Grupo Televisa, S.A.B. stock logo
TV
Grupo Televisa, S.A.B.
5/18/2023$0.0985$0.087612.53%1.6%5/26/20236/12/2023Positive News
NACCO Industries, Inc. stock logo
NC
NACCO Industries
5/18/2023$0.2175$0.20754.82%2.5%5/30/20236/15/2023Gap Up
SL Green Realty Corp. stock logo
SLG
SL Green Realty
5/18/2023$0.2710$0.27080.07%14.31%5/30/20236/15/2023
Advanced Drainage Systems, Inc. stock logo
WMS
Advanced Drainage Systems
5/18/2023$0.14$0.1216.67%0.57%5/31/20236/15/2023Earnings Report
Analyst Report
Mesa Royalty Trust stock logo
MTR
Mesa Royalty Trust
5/18/2023$0.2380$0.158150.54%14.56%5/30/20237/31/2023News Coverage
Positive News
High Trading Volume
Materion Co. stock logo
MTRN
Materion
5/17/2023$0.13$0.12504.00%0.49%5/30/20236/15/2023Insider Selling
Chubb Limited stock logo
CB
Chubb
5/17/2023$0.86$0.833.61%1.73%6/15/20237/7/2023
Enel Chile S.A. stock logo
ENIC
Enel Chile
5/17/2023$0.3076$0.01102,696.36%10.5%5/18/20235/18/2023Positive News
High Trading Volume
Northrop Grumman Co. stock logo
NOC
Northrop Grumman
5/16/2023$1.87$1.738.09%1.67%5/26/20236/14/2023
Vodafone Group Public Limited stock logo
VOD
Vodafone Group Public
5/16/2023$0.4882$0.45407.53%6/8/20238/4/2023Options Volume
MGE Energy, Inc. stock logo
MGEE
MGE Energy
5/16/2023$0.4075$0.40700.12%2.13%5/31/20236/15/2023Positive News
Western Asset Managed Municipals Fund Inc. stock logo
MMU
Western Asset Managed Municipals Fund
5/16/2023$0.0365$0.03601.39%4.4%7/21/20238/1/2023Positive News
Banco Bradesco S.A. stock logo
BBDO
Banco Bradesco
5/15/2023$0.0035$0.00343.24%5.1%6/2/20237/13/2023Positive News
Lennox International Inc. stock logo
LII
Lennox International
5/15/2023$1.10$1.063.77%1.5%6/29/20237/14/2023Positive News
Columbia Banking System, Inc. stock logo
COLB
Columbia Banking System
5/15/2023$0.36$0.3020.00%7.11%5/30/20236/15/2023
América Móvil, S.A.B. de C.V. stock logo
AMX
América Móvil
5/15/2023$0.3605$0.196483.60%1.5%11/9/202311/13/2023
AGCO Co. stock logo
AGCO
AGCO
5/13/2023$5.00$4.5011.11%4.87%5/18/20236/20/2023Gap Up
Highland/iBoxx Senior Loan ETF stock logo
SNLN
Highland/iBoxx Senior Loan ETF
5/12/2023$0.0960$0.09402.13%7.98%5/15/20235/31/2023Positive News
PennantPark Floating Rate Capital Ltd. stock logo
PFLT
PennantPark Floating Rate Capital
5/12/2023$0.1025$0.102.50%10.9%6/14/20237/3/2023
PennantPark Investment Co. stock logo
PNNT
PennantPark Investment
5/12/2023$0.20$0.18508.11%14.1%6/14/20237/3/2023
Marriott International, Inc. stock logo
MAR
Marriott International
5/12/2023$0.52$0.4030.00%1.19%5/25/20236/30/2023Analyst Revision
Betterware de México, S.A.P.I. de C.V. stock logo
BWMX
Betterware de México, S.A.P.I. de C.V.
5/11/2023$0.2002$0.131152.71%7.2%5/19/20235/26/2023Ex-Dividend
Orange S.A. stock logo
ORAN
Orange
5/11/2023$0.3430$0.31429.18%6/1/20236/22/2023
Sun Life Financial Inc. stock logo
SLF
Sun Life Financial
5/11/2023$0.5540$0.54102.40%4.62%5/30/20236/30/2023
Werner Enterprises, Inc. stock logo
WERN
Werner Enterprises
5/11/2023$0.14$0.137.69%1.23%6/30/20237/19/2023
Werner Enterprises, Inc. stock logo
WERN
Werner Enterprises
5/11/2023$0.14$0.137.69%1.23%6/30/20237/19/2023
Penske Automotive Group, Inc. stock logo
PAG
Penske Automotive Group
5/11/2023$0.66$0.618.20%1.6%5/19/20236/1/2023Ex-Dividend
Hamilton Beach Brands Holding stock logo
HBB
Hamilton Beach Brands
5/11/2023$0.11$0.10504.76%4.1%5/31/20236/15/2023High Trading Volume
ESAB Co. stock logo
ESAB
ESAB
5/11/2023$0.06$0.0520.00%0.3%6/29/20237/14/2023
Bunge Limited stock logo
BG
Bunge
5/11/2023$0.6625$0.62506.00%2.8%8/17/20239/1/2023
TORM plc stock logo
TRMD
TORM
5/11/2023$1.46$0.8571.76%16.7%5/22/20236/6/2023
Algonquin Power & Utilities Corp. stock logo
AQN
Algonquin Power & Utilities
5/11/2023$0.2160$0.108599.08%10.02%6/29/20237/14/2023
Ashland Inc. stock logo
ASH
Ashland
5/11/2023$0.3850$0.335014.93%1.77%5/31/20236/15/2023Analyst Revision
ICL Group Ltd stock logo
ICL
ICL Group
5/11/2023$0.1132$0.10408.85%2.5%5/30/20236/14/2023
Cardinal Health, Inc. stock logo
CAH
Cardinal Health
5/11/2023$0.5006$0.49570.99%2.35%6/30/20237/15/2023
Alerus Financial Co. stock logo
ALRS
Alerus Financial
5/10/2023$0.19$0.185.56%5.52%6/14/20237/14/2023
Logan Ridge Finance Co. stock logo
LRFC
Logan Ridge Finance
5/10/2023$0.22$0.1822.22%3.5%5/19/20235/31/2023Ex-Dividend
Curtiss-Wright Co. stock logo
CW
Curtiss-Wright
5/10/2023$0.20$0.195.26%0.49%6/15/20237/5/2023Analyst Report
First Merchants Co. stock logo
FRME
First Merchants
5/10/2023$0.34$0.326.25%5.46%6/1/20236/16/2023Positive News
Hennessy Advisors, Inc. stock logo
HNNA
Hennessy Advisors
5/10/2023$0.1380$0.13750.36%7.91%5/22/20236/5/2023High Trading Volume
Independence Realty Trust, Inc. stock logo
IRT
Independence Realty Trust
5/10/2023$0.16$0.1414.29%3.71%6/29/20237/21/2023Positive News
Portman Ridge Finance Co. stock logo
PTMN
Portman Ridge Finance
5/10/2023$0.69$0.681.47%13.94%5/19/20235/31/2023Ex-Dividend
Gap Down
Osisko Gold Royalties Ltd stock logo
OR
Osisko Gold Royalties
5/10/2023$0.0440$0.04107.32%1.03%6/29/20237/14/2023
Owl Rock Capital Co. stock logo
ORCC
Owl Rock Capital
5/10/2023$0.06$0.0450.00%5/30/20236/15/2023
Vox Royalty Corp. stock logo
VOXR
Vox Royalty
5/10/2023$0.0110$0.008037.50%1.52%6/29/20237/14/2023
CSP Inc. stock logo
CSPI
CSP
5/10/2023$0.04$0.0333.33%1.1%5/24/20236/13/2023Gap Up
Hecla Mining stock logo
HL
Hecla Mining
5/10/2023$0.8750$0.006014,483.33%60.24%6/14/20237/3/2023Ex-Dividend
Townsquare Media, Inc. stock logo
TSQ
Townsquare Media
5/10/2023$0.1880$0.18750.27%7.57%6/29/20238/1/2023
Tetra Tech, Inc. stock logo
TTEK
Tetra Tech
5/10/2023$0.26$0.2313.04%0.72%5/23/20236/6/2023
Taiwan Semiconductor Manufacturing Company Limited stock logo
TSM
Taiwan Semiconductor Manufacturing
5/10/2023$0.4890$0.359735.95%1.7%9/14/202310/12/2023
Sociedad Química y Minera de Chile S.A. stock logo
SQM
Sociedad Química y Minera de Chile
5/10/2023$3.2237$1.2020168.20%10.6%5/11/20235/11/2023Analyst Report
Gap Down
Source Capital, Inc. stock logo
SOR
Source Capital
5/10/2023$0.2083$0.185012.59%6.0%7/17/20237/31/2023
Phillips Edison & Company, Inc. stock logo
PECO
Phillips Edison & Company, Inc.
5/9/2023$0.0933$0.09300.32%3.8%6/14/20237/3/2023
Artesian Resources Co. stock logo
ARTNA
Artesian Resources
5/9/2023$0.2840$0.27802.16%2.03%5/18/20235/26/2023Gap Down
High Trading Volume
VictoryShares US Discovery Enhanced Volatility Wtd ETF stock logo
CSF
VictoryShares US Discovery Enhanced Volatility Wtd ETF
5/9/2023$0.1310$0.0620111.29%3.08%5/10/20235/12/2023
Houlihan Lokey, Inc. stock logo
HLI
Houlihan Lokey
5/9/2023$0.55$0.533.77%2.4%6/1/20236/15/2023
Ark Restaurants Corp. stock logo
ARKR
Ark Restaurants
5/9/2023$0.1880$0.125050.40%4.25%5/30/20236/13/2023Analyst Upgrade
Gap Down
National Bank Holdings Co. stock logo
NBHC
National Bank
5/9/2023$0.26$0.254.00%3.5%5/25/20236/15/2023
Hyster-Yale Materials Handling, Inc. stock logo
HY
Hyster-Yale Materials Handling
5/9/2023$0.3250$0.32250.78%2.4%5/31/20236/15/2023Analyst Downgrade
Apollo Global Management, Inc. stock logo
APO
Apollo Global Management
5/9/2023$0.43$0.407.50%2.76%5/19/20235/31/2023Ex-Dividend
Insider Selling
VAALCO Energy, Inc. stock logo
EGY
VAALCO Energy
5/9/2023$0.0630$0.06250.80%6.09%5/23/20236/23/2023
Karooooo Ltd. stock logo
KARO
Karooooo
5/8/2023$0.85$0.6041.67%16.19%6/22/20237/3/2023
Information Services Group, Inc. stock logo
III
Information Services Group
5/8/2023$0.0450$0.0412.50%3.52%6/6/20236/30/2023
Armada Hoffler Properties, Inc. stock logo
AHH
Armada Hoffler Properties
5/8/2023$0.1950$0.192.63%6.5%6/27/20237/6/2023
Credicorp Ltd. stock logo
BAP
Credicorp
5/8/2023$6.7385$3.938271.11%2.7%5/18/20236/9/2023
KKR & Co. Inc. stock logo
KKR
KKR & Co. Inc.
5/8/2023$0.1650$0.15506.45%1.28%5/19/20236/6/2023Ex-Dividend
Insider Selling
ManpowerGroup Inc. stock logo
MAN
ManpowerGroup
5/5/2023$1.47$1.368.09%3.9%5/31/20236/15/2023
Cabot Co. stock logo
CBT
Cabot
5/5/2023$0.40$0.378.11%2.27%5/25/20236/9/2023
Templeton Global Income Fund stock logo
GIM
Templeton Global Income Fund
5/5/2023$0.0310$0.03041.97%8.7%5/12/20235/31/2023
CNO Financial Group, Inc. stock logo
CNO
CNO Financial Group
5/5/2023$0.15$0.147.14%2.6%6/8/20236/23/2023Insider Buying
Arbor Realty Trust, Inc. stock logo
ABR
Arbor Realty Trust
5/5/2023$0.42$0.405.00%14.3%5/18/20235/31/2023Positive News
The Timken Company stock logo
TKR
Timken
5/5/2023$0.33$0.316.45%1.72%5/15/20235/30/2023
Alcon Inc. stock logo
ALC
Alcon
5/5/2023$0.1365$0.135.00%0.21%5/10/20235/12/2023
Murphy USA Inc. stock logo
MUSA
Murphy USA
5/4/2023$0.38$0.372.70%0.52%5/12/20236/1/2023
Pembina Pipeline Co. stock logo
PBA
Pembina Pipeline
5/4/2023$0.4930$0.490.61%6.06%6/14/20236/30/2023
Pool Co. stock logo
POOL
Pool
5/4/2023$1.10$1.0010.00%1.24%5/16/20235/31/2023
RLI Corp. stock logo
RLI
RLI
5/4/2023$0.27$0.263.85%0.8%5/30/20236/20/2023Positive News
Blue Owl Capital Inc. stock logo
OWL
Blue Owl Capital
5/4/2023$0.14$0.137.69%5.63%5/18/20235/31/2023Gap Up
BCE Inc. stock logo
BCE
BCE
5/4/2023$0.7140$0.71300.14%6.0%6/14/20237/17/2023
First Majestic Silver Corp. stock logo
AG
First Majestic Silver
5/4/2023$0.0060$0.005020.00%0.34%5/17/20236/9/2023
TELUS Co. stock logo
TU
TELUS
5/4/2023$0.2680$0.26401.52%5.14%6/8/20237/4/2023
The Brink's Company stock logo
BCO
Brink's
5/4/2023$0.22$0.2010.00%1.32%5/12/20236/1/2023
Microchip Technology Incorporated stock logo
MCHP
Microchip Technology
5/4/2023$0.3830$0.35806.98%2.01%5/19/20236/5/2023Ex-Dividend
Apple Inc. stock logo
AAPL
Apple
5/4/2023$0.24$0.234.35%0.58%5/12/20235/18/2023
Brookfield Infrastructure Co. stock logo
BIPC
Brookfield Infrastructure
5/4/2023$0.3825$0.38200.13%3.6%5/30/20236/30/2023Positive News
FactSet Research Systems Inc. stock logo
FDS
FactSet Research Systems
5/4/2023$0.98$0.8910.11%0.9%5/30/20236/15/2023
American International Group, Inc. stock logo
AIG
American International Group
5/4/2023$0.36$0.3212.50%2.89%6/15/20236/30/2023
Leggett & Platt, Incorporated stock logo
LEG
Leggett & Platt
5/4/2023$0.46$0.444.55%5.75%6/14/20237/14/2023
Main Street Capital Co. stock logo
MAIN
Main Street Capital
5/4/2023$0.23$0.22502.22%6.6%9/7/20239/15/2023
Credit Suisse X-Links Gold Shares Covered Call ETN stock logo
GLDI
Credit Suisse X-Links Gold Shares Covered Call ETN
5/3/2023$1.9876$1.2262.92%5/19/20235/25/2023Ex-Dividend
Credit Suisse X-Links Crude Oil Shares Covered Call ETNs stock logo
USOI
Credit Suisse X-Links Crude Oil Shares Covered Call ETNs
5/3/2023$1.9479$0.6024223.36%5/19/20235/25/2023Ex-Dividend
Alpha Metallurgical Resources, Inc. stock logo
AMR
Alpha Metallurgical Resources
5/3/2023$0.50$0.4413.64%1.26%6/14/20237/5/2023
Cogent Communications Holdings, Inc. stock logo
CCOI
Cogent Communications
5/3/2023$0.9350$0.92501.08%5.36%5/17/20236/2/2023
Allied Motion Technologies Inc. stock logo
AMOT
Allied Motion Technologies
5/3/2023$0.03$0.025020.00%0.35%5/17/20236/1/2023Analyst Downgrade
Clearway Energy, Inc. stock logo
CWEN
Clearway Energy
5/3/2023$0.3820$0.37501.87%5.21%5/31/20236/15/2023News Coverage
Positive News
How to Invest in Stocks with Increasing Dividends

One key to successful dividend investing is identifying companies that have a history of increasing their dividend yield over time. As dividend yields go up, it typically causes share prices to increase. This is a win-win for investors as they generate regular dividend income while seeing the value of their shares increase. In this article, we’ll take a look at how investors can find stocks that are increasing their dividends and how to maximize their gain from those investments

A dividend is a payment made to shareholders that comes out of a company’s profit. There are two metrics that investors monitor closely. The first is the dividend yield which reflects the value of the dividend relative to the company’s share price. The second is the payout ratio which is the percentage of profit that the company pays out as a dividend.

A dividend is declared and usually pays out quarterly. However, there are some companies that pay a monthly dividend. Still others pay a single, annual dividend. Investors that are looking for income as well as reasonable growth are attracted to dividend stocks.

Companies increase their dividend yield for several reasons.

  • The most common reason is because their net profits are increasing. As net profits increase, there is more money to return to shareholders.
  • A second reason is that a company may have a change in strategy. If a company is forecasting an economic slowdown, they may choose to put less money into capital projects. Conversely, a rapidly growing company may want to consolidate its capital gains and reassess their market position before continuing their growth strategy.
  • A third reason is in an effort to attract more equity investors.

In all cases, the choice to increase a dividend is means that a company is leaving a larger portion of their profits available to be returned to investors as dividends.

The dividend yield is the ratio of a company’s annual dividend compared to its share price represented as a percentage. To calculate dividend yield, let’s look at this example:

  • Company A announces a $2 per share annual dividend. The stock costs $40 per share.
  • Company B announces a $1 per share annual dividend. Their stock also costs $40 per share.

To calculate the yield, you would simply divide the announced per share annual dividend by the share price.

  • For company A, that would be 2/40 = 5%
  • For company B, that would be 1/40 = 2.5%

Simply put, investing $10,000 in Company A would produce $500 of annual dividend income. That same $10,000 in Company B would produce $250 in annual dividend income. Assuming all other fundamentals were the same, income-oriented investors would prefer to invest in Company A because of the higher yield.

The dividend payout ratio (also known as simply the payout ratio) gives investors an idea of how much profit a company is returning to shareholders as opposed to how much money they are keeping on hand for reinvestment, to pay off debt, or to hold as cash (i.e. retained earnings). The formula for the dividend payout ratio is as follows:

  • Dividend Payout Ratio = Dividends Paid/Net Income

Some companies will pay out 100% of their income to shareholders. An investor should expect a company’s payout ratio to be higher if they are a mature, established company. When a company has a high percentage of retained earnings, it can try the patience of investors.

Companies that pay dividends are typically mature companies in what are considered defensive stocks (utilities, consumer staples, etc.). These stocks do not generate the same capital growth as high growth stocks so they offer a dividend to help reward shareholders.

There are many companies that have a solid track record of raising their dividends. The best of the best have royal titles: princes, aristocrats, and kings.

  • Dividend princes have raised their dividend for at least 10 years.
  • Dividend aristocrats have raised their dividend for at least 25 years.
  • Dividend kings have raised their dividend for at least 50 years.

Once you’ve looked at a company’s dividend yield and dividend payout ratio, it’s still important to choose wisely. Although a dividend is generally considered to be a sign that a company is healthy, that is not always the case. Keep in mind that a dividend is an alternative measure to capital growth. Growth investors would rather invest in companies that are generating impressive revenue and plowing that money back into their business to stimulate even more growth.

A company like Coca-Cola (NYSE:KO) continues to grow year after year (it’s a favorite of Warren Buffett). However, much of Coke’s appeal is in its dividend that is both consistent and growing every year. That brings up the importance of an increasing dividend. Just because a company has a reputation for offering a dividend, investors should still expect a level of dividend growth to increase their total return.  

Also, remember that just because a company announces a dividend does not mean they have to pay it. If a company runs into financial difficulty, dividends are usually the first thing to get cut. An example of this occurred at the onset of the Covid-19 pandemic when many dividend paying companies suspended or cut their dividends in anticipation of weak revenue and/or earnings.

Any company that has both the desire and the ability to generate increased dividend payments for their shareholders is a stock worth considering for an investor’s portfolio.

Many, but not all, dividend-paying companies allow individuals to reinvest dividends through a dividend reinvestment plan (DRIP). Automatic reinvestment is a strategy for investors who do not need the regular income that is generated by dividends.

Here’s a simplified example of how a DRIP works. Company XYZ has a share price of $25 per share and a dividend yield of 5%. If an investor buys 100 shares, they will earn a yearly dividend of $125 ($2,500 x 5%). If they choose to reinvest that dividend, at the end of the year they will have purchased an additional five shares of Company XYZ stock and the value of their holdings assuming the share price remained at $25 would be $2,625. It’s a wash, right? But what if the share price climbs to $30 by the end of the year? Assuming the dividend yield does not increase, the payout would be $125, but the 105 shares would now be worth $3,150.

Some companies allow investors to put in additional money (with some minimum and maximum restrictions). An investor will typically pay market price for those shares, although some companies will sell these shares at a slight discount.

There are two caveats for investors looking to buy additional shares separate from dividends being reinvested. First, is that it can take some time to sell the shares that you buy directly from the company. Second, it is important to remember that every dividend reinvestment represents shares that are being purchased at a different price. This means that the capital gains are going to be different for every transaction. Therefore, when you go to sell these shares all of those capital gains have to be accounted for.

Investing in a dividend mutual fund or ETF is a good option for beginning investors and investors who don’t want to take the time to choose their own stocks or track individual stocks once they buy them. These funds are typically comprised of multiple dividend-paying stocks. If you believe in the idea of not putting all your eggs in one basket, this may be a great option.

However, choosing a fund can be like walking into a Baskin-Robbins. There are a lot of varieties and it’s still up to you to decide on which funds are right for you. You’ll want to look at the stocks that are included and check their dividend yield, their consistency with paying the dividend over time, their expense ratio (low is good) and the size of the company, or market capitalization. From lowest to highest risk, there are large caps, mid-caps and small caps.

If dividends are attractive to some investors why do companies cut their dividend? As we mentioned above, a company that is not rapidly growing may take on debt to spur growth. If the company takes on a lot of debt in a short period of time, the dividend may have to get cut in order for the company to service the payment of the debt.

One trap that can befall dividend investors is chasing a high yield. In some cases, a company’s dividend yield exists for good reason. But in some cases, a high dividend yield is a warning that the company is not financially stable. That’s why it’s always good to follow the strategy of looking at a company’s fundamentals to understand if their dividend yield and/or payout ratio is sustainable and also looking for companies with a history of increasing yields.

Investing in dividend stocks is a time-honored way of growing wealth slowly. Following the simple three-part strategy of choosing a company wisely, looking to reinvest your dividends, and if necessary investing in dividend mutual funds and ETFs are good ways to identify and take advantage of dividend stocks that are increasing their dividends on a regular basis.

Dividend investing is not about chasing the highest yield you can find. There are often reasons why a company is offering a high yield. Like many things in life, if it looks too good to be true, it usually is.

 

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