Imagine, for a moment, that you heard rumors that you were up for an 8.5 percent raise this year. You’d be pretty psyched, right?
Further imagine that your raises over the previous 12 years were as follows (we’re rounding here, but you’ll get the point) — 9 percent, 11 percent, 10 percent, 10 percent, 16 percent, 15 percent, 21 percent (!), 11 percent, 10 percent, 6 percent, 9 percent and 10 percent.
In case you’re interested, your pay would have increased 266 percent in the past dozen years. Know anybody that fortunate who has held the same job?
If you’re thinking there’s a catch to all this, here it is: The figures above do not represent raises from an actual job; rather, they are the dividend increases issued by defense contractor Raytheon Co. since 2005.
Put another way, raises you would have received for not even working.
Barron’s reports that research firm IHS Markit is predicting that Raytheon will increase its dividend by 8.5 percent this year, from $2.93 per share annually to $3.18. As you can see from the figures above, this would be on the low end of Raytheon’s 13-year run of dividend increases.
At the risk of stating the obvious, you can’t (normally or regularly) get raises like this in your working life. That’s why investing in dividend-paying companies is such a great idea. Investing in dividend-paying companies that have a history of hiking dividends is even better. And when you have a dividend-paying company that regularly increases its dividend and which happens to be based in your own backyard (so that you can follow it more closely), well, what more can you ask?
Here’s another interesting tidbit. Back in 2004, when Raytheon was paying 80 cents per share annually, it represented about a 2.8 percent payout. Had the stock never moved in price, your present dividend would be more than 10 percent of your original investment. Try finding that return on any fixed-income investment.
Oh, yeah, Raytheon stock has moved since 2004. In fact, it has moved quite a bit. Shares closed Wednesday at $154.73, up 33 cents.