This is the sixth and final installment in a multi-part series that looks at various options used by income investors to boost their yield while waiting for dividend growth to lift their portfolio's overall yield-on-cost. Last week we looked at Master Limited Partnerships (MLPs). This week we are looking at Time.Yield does not come without a price. The five options looked at in prior weeks carry some form of added risk and/or complexity. Ultimately, dividend growth investors realize that long-term and sustainable high-yield investments are grown over time. This is accomplished by purchasing high-quality dividend investments with a reasonable yield and a long history of growing their dividends, and waiting for the yield on cost to grow. Consider the following stocks:
Sysco Corp. (SYY) - [Analysis]
- Current Yield: 3.36%
- Assumed Dividend Growth Rate: 6.52%
- Yield On Cost in 10 Years: 6.32%
- Yield On Cost in 20 Years: 11.89%
Coca Cola Co. (KO) - [Analysis]
- Current Yield: 3.22%
- Assumed Dividend Growth Rate: 7.32%
- Yield On Cost in 10 Years: 6.53%
- Yield On Cost in 20 Years: 13.22%
Abbott Labs (ABT) - [Analysis]
- Current Yield: 3.25%
- Assumed Dividend Growth Rate: 8.27%
- Yield On Cost in 10 Years: 7.20%
- Yield On Cost in 20 Years: 15.93%
Raven Industries Inc. (RAVN) - [Analysis]
- Current Yield: 1.85%
- Assumed Dividend Growth Rate: 15.00%
- Yield On Cost in 10 Years: 7.49%
- Yield On Cost in 20 Years: 30.31%
Kimberly Clark Corp. (KMB) - [Analysis]
- Current Yield: 4.20%
- Assumed Dividend Growth Rate: 6.67%
- Yield On Cost in 10 Years: 8.02%
- Yield On Cost in 20 Years: 15.30%
United Technologies Corp. (UTX) - [Analysis]
- Current Yield: 2.09%
- Assumed Dividend Growth Rate: 15.00%
- Yield On Cost in 10 Years: 8.46%
- Yield On Cost in 20 Years: 34.24%
Harleysville Group Inc (HGIC) - [Analysis]
- Current Yield: 4.09%
- Assumed Dividend Growth Rate: 8.00%
- Yield On Cost in 10 Years: 8.83%
- Yield On Cost in 20 Years: 19.07%
Cardinal Health Inc (CAH) - [Analysis]
- Current Yield: 1.98%
- Assumed Dividend Growth Rate: 15.00%
- Yield On Cost in 10 Years: 8.00%
- Yield On Cost in 20 Years: 32.34%
Nucor Corp. (NUE) - [Analysis]
- Current Yield: 3.15%
- Assumed Dividend Growth Rate: 15.00%
- Yield On Cost in 10 Years: 12.76%
- Yield On Cost in 20 Years: 51.60%
McDonalds Corp. (MCD) - [Analysis]
- Current Yield: 3.27%
- Assumed Dividend Growth Rate: 15.00%
- Yield On Cost in 10 Years: 13.23%
- Yield On Cost in 20 Years: 53.53%
The growth rates used above are the minimum of the compound annual dividend growth rate for the last 1, 3, 5, 7, 10 years or 15% if dividends grew on average in excess of 15% for each consecutive 4 year period, within the last 10 years. The growth rates are for illustrative purposes only. Obviously, no one can definitively say what any stock's future dividend growth rate will be. However, there were dividend growth superstars over the past 10-years and, needless to say, there will be several in the next 10 years.
Below are links to the other five options to increase the yield in our income portfolio:
1. Increasing Dividend Yield Part I: Utilities
2. Increasing Dividend Yield Part II: REITs
3. Increasing Dividend Yield Part III: Preferred Stock
4. Increasing Dividend Yield Part IV: Bonds
5. Increasing Dividend Yield Part V: MLPs
Full Disclosure: Long SYY, KO, ABT, KMB, UTX, HGIC, NUE, MCD. See a list of all my income holdings here.
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Tags: [ABT] [CAH] [HGIC] [KMB] [KO] [MCD] [NUE] [RAVN] [SYY] [UTX]