Dividend growers headline this week’s purchases

March toward $1,000,000: Week 2 (Aug. 6-10)


Since I went the high-yield route my first week back, I decided it would be good to throw a few dividend growers into my portfolio in Week 2.

This week’s purchases

A great place to find dividend growers is among the industrials, which is exactly where I went for my first two purchases. I scooped up single shares of Illinois Tool Works (ITW) and 3M Co. (MMM) for $139.92 and $207, respectively.

ITW’s P/E ratio (24.91) doesn’t say it’s cheap, but its current price is toward the low side of its 52-week range. That helped in my decision to make it one of the early additions to my Dividend Farm, but I honestly wasn’t all that concerned with getting a good deal. Like I said before, I wanted a solid dividend grower and, well, ITW is most certainly that.

Its board recently approved a 28% dividend increase, which brings its current annualized payment to $4 a share (2.85% yield). That’s a significant jump and, with a payout ratio of 56.73% and quarterly growth in both revenue and earnings, nothing’s holding the company back from making more big boosts in the future.

As long as we’re on the topic, it’s all but certain MMM will keep boosting its dividend. I mean, it’s done exactly that for the last 59 years … and is still doing it at rates above 10%. Its average dividend-growth rate over the course of the last five years has been 15.87%. MMM, with its $5.44 a share annualized payment (2.63% yield), is a great DGI stock, period.

Another solid dividend grower I picked up this week comes from the materials sector: Air Products and Chemicals (APD). I didn’t get the best price ($160.42), but I’ll live. I like the company.

Like MMM, APD has been an absolute dividend-growing machine over the last handful of decades. It’s boosted its dividend for each of the last 35 years (9.11% over the course of the last three). The company’s current annualized dividend sits at $4.40 a share (2.74% yield).

Finally, I scooped up two shares of Starbucks (SBUX) at an average cost of $52.04 and my fourth share of Cardinal Health (CAH).

The bottom line

Combined, this week’s purchases boosted my forward annual dividend income by $18.63. Coupled with last week’s $23.73, I’m up to $42.36.

March on!


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