My regular followers know that I track the dividend increases of a variety of long-term dividend growth companies. I usually publish my predictions monthly. However, I because there were so many companies that I expected to announce increases in February, I decided to break up the February article into two parts, covering 11 companies in the second half of February. Of these 11 companies, I accurately predicted 7, underestimated 2 and overestimated 1 of them based on their historical dividend growth records and current EPS growth. You can see the original article here.
There was one company that announced dividends earlier than I expected. TJX Companies (NYSE:TJX) announced a 20.2% dividend increase to an annualized $1.25. This is the clothing retailer's 8th year of 20%+ increases. The company goes ex-dividend in April and will pay the new dividend in June.
Before I give you my predictions for the dividend increases for March, let's take a look at how well I did with the predictions from the second half of February:
Prediction: 4.9 - 6.2% increase to $1.28 - $1.30.
Actual: 4.9% increase to $1.28
Forward yield: 1.26%
The specialty chemical company is facing decreased earnings expectations but the stock recently popped more than 9% after beating its own earnings guidance on a 2% growth in earnings per share. Despite this, Albemarle decided to play it safe and hit the low end of my prediction.
Best Buy (NYSE:BBY)
Prediction: 21.4 - 25.0% increase to $1.36 - $1.40.
Actual: 21.4% increase to $1.36
Forward yield: 3.08%
The electronics retailer continued its outstanding record of dividend growth with its 3rd straight year of 20%+ increases.
Essex Properties Trust (NYSE:ESS)
Prediction: 10.9 - 14.1% increase to $7.10 - $7.30
Actual: 9.4% increase to $7.00
Forward yield: 2.98%
The California-based REIT fell just short of my expectations - I had hoped for a 3rd straight year of double-digit growth from Essex Properties.
Genuine Parts Company (NYSE:GPC)
Prediction: 2.7 - 5.7% increase to $2.68 - $2.76
Actual: 2.7% increase to $2.70
Forward yield: 2.82%
Genuine Parts' had nearly no earnings growth this year and this is reflected in the auto parts company's 61st year of dividend growth, which hit the low end of my prediction.
McGrath RentCorp (NASDAQ:MGRC)
Prediction: 2.0 - 3.9% increase to $1.04 - $1.06.
Actual: 2.0% increase to $1.04
Forward yield: 2.76%
This is the 8th straight year of 2 cent annual dividends from McGrath RentCorp, and the company's 24th straight year of dividend growth overall.
Old Republic International Corporation (NYSE:ORI)
Prediction: 1.3 - 4.0% increase to $0.76 - $0.78.
Actual: 1.3% increase to $0.76
Forward yield: 3.67%
I had hoped for a slightly larger dividend increase this year. Instead, insurer Old Republic announced its 9th straight year of a penny per share dividend increase.
Prediction: 6.9% - 10.3% increase to $0.62 - $0.64
Actual: 10.3% increase to $0.64
Forward yield: 0.86%
Perrigo manufactures generic medicines and private label nutritional products. The company hit the top end of my prediction despite guiding earnings down in its last earnings report. This is Perrigo's 15th year of dividend growth.
Ross Stores (NASDAQ:ROST)
Prediction: 11.1 - 16.7% increase to $0.60 - $0.63.
Actual: 18.5% increase to $0.64
Forward yield: 0.93%
Ross Stores blew away my predictions with a nearly 20% dividend increase, well outpacing this year's earnings growth. This is the discount retailer's 23rd year of dividend growth.
Prediction: 5.2 - 7.0% increase to $2.42 - $2.46.
Actual: 6.5% increase to $2.45
Forward yield: 3.53%
Utility company SCANA beat its 5-year average for the second year - this increase of 6.5% comes on top of last year's 5.5% increase. This is SCANA's 17th year of dividend growth.
Telephone & Data Systems (NYSE:TDS)
Prediction: 1.4 - 3.4% increase to $0.60 - $0.612.
Actual: 4.7% increase to $0.62
Forward yield: 2.29%
Despite a drop in earnings due to special charges, the telecom provider still managed to announce a dividend increase in line with its long term average for its 42nd year of annual dividend increases.
Prediction: 2.0 - 4.0% increase to $2.04 - $2.08.
Actual: 2.0% increase to $2.04
Forward yield: 2.88%
Walmart's 43rd year of dividend growth comes in spite of a 7% drop in earnings per share. This is the retailers 4th year of a penny per share quarterly dividend increase.
Four Dividend Increases Expected in March
Here are my predictions for the 4 dividend increases I expect in March:
The consumer brands giant saw 2015's EPS suppressed by the issues in Venezuela, as Colgate-Palmolive moved to an all-cash basis for its operations in the country. With that issue behind it, Colgate-Palmolive's EPS for 2016 was up 42% from 2015's $1.52. When adjusting for Venezuela, 2016 EPS were down 1% from 2015. The company is seeing weakness in its sales, with volume down 3% and currency effects dropping another 4.5% off of 2016 full-year sales. With the downward pressure on sales and EPS, I expect to see a smaller payout increase than Colgate's 5-year average of 6.4%.
Prediction: 2.6 - 6.4% increase to $1.60 - $1.66
Predicted Forward Yield: 2.19 - 2.25%
General Dynamics Corporation (NYSE:GD)
The newest Dividend Aristocrat recently reported EPS growth of 9% for 2017. The aerospace and defense giant has a good record of dividend growth, with a 5-year average of 10%. With a current payout of $3.04 and 2016 full year EPS of $9.87, General Dynamics sports a payout ratio of 31%, giving the company plenty of room for another year of double-digit dividend growth.
Prediction: 10.5 - 11.8% increase to $3.36 - $3.40
Predicted Forward Yield: 1.77 - 1.79%
General Mills (NYSE:GIS)
The manufacturer of popular consumer food brands like Cheerios cereal, Yoplait yogurt and Haagen-Dazs ice cream has grown dividends for 13 straight years. The company posted full year EPS of $2.92 in 2016 and is guiding for a 5 - 7% increase in 2017. General Mills raised the dividend twice last year, announcing 8 cent annual bumps in March and in June. If the company decides to announce the annual dividend increase in March, I expect a dividend increase of less than the 5 and 10 year averages of 10%. Otherwise, I'll reassess my expectation in June.
Prediction: 4.2 - 8.3% increase to $2.00 - $2.08
Predicted Forward Yield: 3.31 - 3.45%
Xilinx Corporation (NASDAQ:XLNX)
Xilinx Corporation designs and markets advanced programmable integrated circuits for use in a wide variety of industries, including industrial, aerospace and defense, and telecommunications. The company has a good record of dividend growth, with a 5-year average of more than 12%. Xilinx has posted revenue growth for the last 5 quarters and over the last 9 months has grown EPS by 6% year-over-year. The company has traditionally announced its annual dividend increase in late March but last year announced it in late April.
With the EPS growth year-to-date and a payout ratio of 65%, I expect that Xilinx's 14th year of dividend growth will be more modest than its 5-year average.
Prediction: 6.1 - 9.1% increase to $1.40 - $1.44
Predicted Forward Yield: 2.38 - 2.45%
If you enjoyed this article and would like to find out how my predictions turn out at the end of March, please follow me by clicking the "Follow" button next to my name at the top of the article. Thanks!
Disclosure: I am currently long ALB and ROST. Furthermore, I may take a position in any of the stocks mentioned in this article in the near future.
Disclosure: I am/we are long ALB, ROST.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.