Friday, December 28, 2012

Long-Term Dividend Growth

In spite of the economy's ups and downs, long-term dividend growers have continued to raise their dividends at a high and stable pace well ahead of the rate of inflation. Johnson & Johnson is on a streak of forty-nine years of consecutive dividend raises.

But be aware that even if companies raise their dividends every year, it is not enough. The dividend increases must be robust. This is not a problem with Johnson & Johnson. The company has excelled.

Over the forty-nine years, its dividend growth rate has averaged fifteen percent. That doubles the dividends that you receive every five years. In the context of average long-term inflation of around 3-3.5 percent, even the company's lowest dividend growth rate of four percent (in 1972) is still not bad.

However, in a sign of maturation or a reflection of its recent business blunders, or both, the company's dividend growth rate has slowed the last few years. Whether this is a permanent change or a pause remains to be seen.

Johnson & Johnson's dividend history since 1972, from the company's website.

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