A dividend is a portion of company profit paid to shareholders, usually in proportion to the shares they own. Not every company pays dividends. section 1.6 section 5.1
Companies commonly begin by reinvesting profits into growth. Mature businesses with stable profits and fewer attractive reinvestment opportunities can distribute surplus cash instead. This makes dividends relevant to passive-income strategies, but does not make them risk-free. section 5.0 section 5.1
Useful dividend analysis compares:
- Dividend yield: dividend income relative to the stock price. section 1.2.1
- Payout ratio: the portion of profits distributed to shareholders. section 2.4.6
- Dividend growth and payment history, which help distinguish established payout patterns from newer ones. section 2.4.6
- Industry and business maturity: utilities may pay more than technology companies, while a BCG “cash cow” can generate stable surplus cash. section 5.1
Yield is not the whole decision
In June 2025, Apple’s quarterly dividend was roughly $0.26 per share, producing a yield near 0.49%. A 10-year US Treasury bond yielded around 4.3%, so buying Apple solely for dividend income could lose purchasing power to inflation unless capital gains also contribute. section 1.2.1
Table 2.9 Dividends of Apple, Altria, Microsoft, NVIDIA, Sempra, Walmart, and Coca-Cola highlighting different payout strategies
|
Company
|
Yield FWD %
|
Payout ratio %
|
Div growth 5Y %
|
Consecutive years of growth
|
Consecutive years of dividend payments
|
|---|---|---|---|---|---|
|
Apple (AAPL)
|
0.51
|
14.10
|
5.24
|
12
|
12
|
|
Altria (MO)
|
6.89
|
77.54
|
4.00
|
55
|
55
|
|
Microsoft (MSFT)
|
0.71
|
25.04
|
10.24
|
20
|
20
|
|
NVIDIA (NVDA)
|
0.03
|
1.25
|
20.11
|
1
|
12
|
|
Sempra (SRE)
|
3.36
|
53.18
|
4.88
|
14
|
26
|
|
Walmart (WMT)
|
0.96
|
34.03
|
4.41
|
51
|
51
|
|
Coca-Cola (KO)
|
2.86
|
67.99
|
4.20
|
62
|
62
|
|
Data from Seeking Alpha on June 8, 2025 (
https://seekingalpha.com)
|
Compare yield, payout ratio, five-year dividend growth, and payment history across companies to see how dividend strategies differ. section 2.4.6
Listing 5.1 Calculating dividend growth
def calc_div_growth_rate (stock):
try:
dividends = stock.dividends
if dividends.empty:
return None, None
dividends_by_year = dividends.resample('YE').sum() #1
if len(dividends_by_year) > 1: #2
first_year = dividends_by_year.index[0].year #2
last_year = dividends_by_year.index[-1].year #2
first_dividend = dividends_by_year.iloc[0] #2
last_dividend = dividends_by_year.iloc[-1] #2
num_years = last_year - first_year #2
cagr = ((last_dividend / first_dividend) #2
** (1 / num_years)) - 1 #2
else: #2
cagr = None
payouts_per_year = dividends.resample('YE').
count().mean() #3
if payouts_per_year > 3.5: #3
payout_frequency = "Quarterly" #3
elif payouts_per_year > 1.5: #3
payout_frequency = "Semi-Annual" #3
elif payouts_per_year > 0.5: #3
payout_frequency = "Annual" #3
else: #3
payout_frequency = "Irregular"
return cagr, payout_frequency
except Exception as e:
print(f"Error processing {stock}: {e}")
return None, None
Calculate annual dividend growth from historical payouts by resampling payments by year and estimating compound annual growth. section 5.1
