Real Raises -- No Work Required

The real-money Inflation-Protected Income Growth portfolio attempts to generate an income stream that rises each year at least as fast as inflation. Its primary means of doing that is to buy shares in companies that have a history of paying and increasing their dividends and that look capable of continuing that trend.

This most recent week showcased the potential available in that strategy. Since the time covered in last week's update, two picks in the portfolio announced inflation-beating increases in their dividends. In addition, one of those two companies plus another one held in the portfolio both paid out dividends that were higher than the payments they made in the same quarter last year.

Do nothing -- get more money
The biggest news on the dividend front last week for the iPIG portfolio was Microsoft's (NASDAQ: MSFT  ) announcement that it was raising its dividend around 22%, to $0.28 per share per quarter . The nickel per share increase adds roughly $11 per year  to the $50.60  in anticipated income the iPIG portfolio had been receiving on the 55 shares of Microsoft stock it owns . That's a pretty impressive performance for an investment made on a company priced like it would never grow again.

Fellow iPIG pick McDonald's (NYSE: MCD  ) also raised its dividend in the past week, but its increase was a more modest 5%, to $0.81 per share per quarter . While that's substantially lower than Microsoft's 22%, it still is well ahead of the 1.5% annual inflation rate also published last week by the Bureau of Labor Statistics . In addition to that announced increase, McDonald's paid a $0.77 per share dividend last week,  a better than inflation level increase to the $0.70 it paid a year ago .

Also on the dividend front from this past week, NV Energy (NYSE: NVE  ) paid its owners (including the iPIG portfolio) $0.19 per share. That's close to an 11% raise from the $0.17 it paid during the same quarter last year . Unfortunately, the Nevada based electricity generator won't be able to continue the trend of increasing dividends, as it's on track to be bought out for cash in the first quarter of 2014 .

Coming soon -- another increased dividend
Not to be left out of the party, fellow iPIG pick Union Pacific (NYSE: UNP  ) has gone ex-dividend on a $0.79 per share payment expected to be handed to shareholders on Oct. 1. That's a better than 14% increase from the $0.69 dividend it paid last quarter .

Of course, dividends are not guaranteed payments and increases are even less assured. The fact remains, however, that many of the companies in the iPIG portfolio have increased their dividends since being bought for the portfolio, and others are expected to follow. Best of all, the iPIG portfolio didn't have to lift a finger to receive those increases. After that initial buy, there was absolutely no other work required.

History isn't a promise for the future, and dividends are not guaranteed. Those are key reasons why each pick gets reviewed to see if it's still worth owning. So far, thanks to rising dividends, the portfolio looks to be on track to meet its objective to increase its income at least as fast as inflation. The table below shows a snapshot of the iPIG portfolio, as of the market close on Friday, Sept. 20, 2013:

Company Name

Purchase Date

Total Investment (Including Commissions)

Current Value
Sept. 20, 2013

Current Yield
Sept. 20, 2013

United Technologies (NYSE: UTX  )

12/10/2012

$1,464.82

$1,972.44

1.95%

Teva Pharmaceutical (NYSE: TEVA  )

12/12/2012

$1,519.40

$1,433.36

3.19%

J.M. Smucker (NYSE: SJM  )

12/13/2012

$1,483.45

$1,821.38

2.17%

Genuine Parts (NYSE: GPC  )

12/21/2012

$1,476.47

$1,870.13

2.64%

Mine Safety Appliances (NYSE: MSA  )

12/21/2012

$1,504.96

$1,848.24

2.34%

Microsoft (NASDAQ: MSFT  )

12/26/2012

$1,499.15

$1,803.45

3.42%

Hasbro (NASDAQ: HAS  )

12/28/2012

$1,520.60

$2,097.97

3.28%

NV Energy (NYSE: NVE  )

12/31/2012

$1,504.72

$1,973.16

3.24%

United Parcel Service (NYSE: UPS  )

1/2/2013

$1,524.00

$1,831.00

2.71%

Walgreen (NYSE: WAG  )

1/4/2013

$1,501.80

$2,220.80

2.27%

Texas Instruments (NASDAQ: TXN  )

1/7/2013

$1,515.70

$1,904.44

2.96%

Union Pacific 

1/22/2013

$805.42

$957.30

1.98%

CSX (NYSE: CSX  )

1/22/2013

$712.50

$898.28

2.27%

McDonald's 

1/24/2013

$1,499.64

$1,550.40

3.34%

Becton, Dickinson (NYSE: BDX  )

1/31/2013

$1,518.64

$1,837.08

1.94%

AFLAC (NYSE: AFL  )

2/5/2013

$1,466.35

$1,682.64

2.25%

Air Products & Chemicals (NYSE: APD  )

2/11/2013

$1,510.99

$1,845.69

2.62%

Raytheon (NYSE: RTN  )

2/22/2013

$1,473.91

$2,133.00

2.78%

Emerson Electric (NYSE: EMR  )

4/3/2013

$1,548.12

$1,817.76

2.53%

Wells Fargo & Co. (NYSE: WFC  )

5/30/2013

$1,525.48

$1,585.45

2.80%

Kinder Morgan (NYSE: KMI  )

6/21/2013

$1,518.37

$1,520.82

4.42%

Cash

   

$488.84

 

Total Portfolio

   

$37,093.63

 
Data from the iPIG portfolio brokerage account, as of Sept. 20, 2013.

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To follow the IPIG portfolio as buy and sell decisions are made, watch Chuck's article feed by clicking here. To join The Motley Fool's free discussion board dedicated to the IPIG portfolio, simply click here.


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