2 Of 11 Dividend Increases In June Expected To Be In The Double Digits

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Includes: ARTNA, BCR, BG, CAH, CASY, CAT, CB, CBRL, CLX, DCI, EXPD, FDS, FDX, FLO, GIS, JW.A, LEG, LOW, MDT, MSA, NFG, NOC, RLI, TGT, TIF, WEYS
by: Harvesting Dividends

Summary

14 dividend growth companies that I track announced their annual or semi-annual dividend increases in May.

Many announcements were as I expected, but four of the increases were smaller than I expected. In addition, one company will announce its increase in early June.

For June, I see 11 dividend growth companies announcing dividend increases, with two or three expected to increase their dividends by more than 10%.

My regular followers know that I track the dividend increases of a variety of long-term dividend growth companies. Back at the end of April, I provided predictions for 15 dividend growth companies that have historically announced annual payout increases in May. Unfortunately, I missed one other company that also announced its annual dividend increases: furniture manufacturer Leggett & Platt (NYSE:LEG) announced a 6% increase in its dividend to an annualized $1.44. The company has a forward yield of 2.76%.

Before I give you my predictions for the dividend increases for June, let's take a look at how well I did with the predictions from May (you can see the article with the original predictions here).

Artesian Resources (NASDAQ:ARTNA)

Prediction: 1.0-2.0% increase to $0.9223-0.9315

Actual: 1.5% increase to $0.9268

Forward yield: 2.56%

The mid-Atlantic water utility increases dividends twice a year. With an increase of 1.5% announced in May, Artesian investors can expect a total increase around 3% in the company's 21st year of dividend growth.

Bunge Limited (NYSE:BG)

Prediction: 9.5-14.3% increase to $1.84-1.92

Actual: 9.5% increase to $1.84

Forward yield: 2.24%

Despite flat EPS growth, Bunge was able to meet my expectations for a dividend increase around the five-year growth average of 10%. This is the agribusiness' 16th straight year of dividend growth.

Cardinal Health (NYSE:CAH)

Prediction: 6.9-11.3% increase to $1.92-2.00

Actual: 3.0% increase to $1.8496

Forward yield: 2.53%

The flat earnings expected in 2017 and 2018 by the healthcare company clearly impacted Cardinal Health's 33rd year of dividend growth. I had hoped that the payout ratio around 30% would allow the company to increase the dividend closer to the five-year average of 16%, but Cardinal Health's board is playing it safe.

Chubb Limited (NYSE:CB)

Expected Increase: 2.9% to $2.84

Forward yield: 2.00%

As expected, Chubb's shareholders approved the board proposal for the insurer to give a 2.9% dividend increase in its 24th straight year of dividend growth.

The Clorox Company (NYSE:CLX)

Prediction: 2.5-5.0% increase to $3.28-3.36

Actual: 5.0% increase to $3.36

Forward yield: 2.49%

The consumer goods company hit the high end of my prediction in its 40th year of dividend growth. Although Clorox grew earnings at 7.7%, dividend growth was limited by high debt.

Donaldson Company (NYSE:DCI)

Prediction: 2.9-8.6% increase to $0.72-0.76

Actual: 0% increase to $0.70

Forward yield: 1.50%

The filtration company held its dividend flat this quarter. Technically, Donaldson can still show year-over-year dividend growth without an increase this year, but I expect that the expected EPS growth of around 8% will justify an increase later this year. I'll push my prediction to August, when Donaldson will make its next dividend announcement.

Expeditors International of Washington (NASDAQ:EXPD)

Prediction: 10.0-12.5% increase to $0.88-0.90

Actual: 5.0% increase to $0.84

Forward yield: 1.59%

Despite a small drop in EPS last year, I expected that the logistics company would leverage its low payout ratio to continue its strong dividend growth record. Unfortunately, Expeditors' semi-annual dividend payment in June will be an increase of roughly half the five-year growth rate of 10%. This is Expeditors' 23rd year of dividend growth.

FactSet Research Company (NYSE:FDS)

Prediction: 13.0-16.0% increase to $2.26-2.32

Actual: 12.0% increase to $2.24

Forward yield: 1.38%

Investors got another year of double-digit dividend growth from the financial data products company, but I was hoping for a slightly higher increase. This is FactSet Research's 19th year of dividend growth.

Flowers Foods (NYSE:FLO)

Prediction: 3.1-6.3% increase to $0.66-0.68

Actual: 6.3% increase to $0.68

Forward yield: 3.66%

The national baker - owner of the Tastykake and Nature's Own brands, among others - saw adjusted EPS stay flat in 2016. As I expected, this cut this year's increase to about half of the five-year average growth rate.

Lowe's Companies (NYSE:LOW)

Prediction: 20.0-25.7% increase to $1.68-1.76

Actual: Deferred to June

Lowe's will announce its annual dividend increase at its annual shareholder meeting on June 2nd. I'm carrying forward my prediction to next month.

MSA Safety Incorporated (NYSE:MSA)

Prediction: 9.1-18.8% increase to $1.40-1.52

Actual: 9.1% increase to $1.40

Forward yield: 1.76%

MSA hit my expectation of a dividend increase of around 9% in its 46th year of dividend growth, consistent with the safety products company's 10-year average.

(Note: In last month's article where I made the prediction, I incorrectly reported the percent increase and number of years of dividend growth. The numbers above are correct).

Northrop Grumman (NYSE:NOC)

Prediction: 11.1-13.9% increase to $4.00-4.10

Actual: 11.1% increase to $4.00

Forward yield: 1.56%

Despite flat EPS growth, Northrop's payout ratio of 30% meant another year of a 10%+ increase from the aerospace and defense company - its 14th consecutive year of dividend growth.

RLI Corporation (NYSE:RLI)

Prediction: 5.0% increase to $0.84

Actual: 5.0% increase to $0.84

Forward yield: 1.51%

The specialty insurer continued its pattern of increasing its dividend by 4 cents a year. This is RLI's 42nd straight year of dividend growth.

Tiffany & Co. (NYSE:TIF)

Prediction: 6.7-8.9% increase to $1.92-1.96

Actual: 11.1% increase to $2.00

Forward yield: 2.32%

The jewelry designer and retailer's 15th year of dividend growth was more than the five-year average growth rate of 9.3% and about twice the expected EPS growth rate in the mid single digits.

Weyco Group (NASDAQ:WEYS)

Prediction: 4.8-7.1% increase to $0.88-0.90

Actual: 4.8% increase to $0.88

Forward yield: 3.22%

Despite an EPS drop, footwear designer Weyco met the low end of my expectations for its 35th year of dividend growth, consistent with the company's five-year growth average of 5.3%.

10 Announcements of Dividend Increases Expected in June

Here are my predictions for the 10 dividend increases I expect in June (not including Lowe's Companies, as noted above):

C. R. Bard (NYSE:BCR)

The medical technology company continues to grow earnings and recently increased full-year 2017 adjusted EPS guidance to between $11.65 and $11.90, an increase of more than 14% over 2016. Bard's current dividend of $1.04 gives the company plenty of room for its 46th year of dividend growth. Dividend growth continues to expand, from the five-year average of 6.2% to last year's 8.3% increase. I expect an increase in the low double digits.

Prediction: 8.0-9.6% increase to $1.12-1.14

Predicted Forward Yield: 0.36-0.37%

Casey's General Stores (NASDAQ:CASY)

Casey's General Stores operates nearly 2,000 convenience stores across the Midwest. The company has been expanding rapidly with earnings - and dividends - growing quickly. Over the last 5 and 10 years, Casey's has compounded dividends at more than 10% and 17%, respectively. However, the company is having troubles this year: so far same-store sales of groceries and prepared foods are up roughly half of the full-year goal. Despite this, Casey's has room to grow the current 96 cent annual dividend, but I expect it'll be less than last year's 9.1% boost. This will be Casey's 28th year of dividend growth.

Prediction: 6.3-8.3% increase to $1.02-1.04

Predicted Forward Yield: 0.88-0.90%

Caterpillar (NYSE:CAT)

Under financial pressure, the manufacturer of heavy machinery skipped its dividend increase last year after a 10% increase in 2015. Since then, Caterpillar has been restructuring and seems to be on the upswing. After losing 11 cents per share in 2016, the first quarter of 2017 brought GAAP EPS of 32 cents and, when temporary restructuring costs are excluded, EPS of $1.28. Further, Caterpillar is guiding full-year GAAP EPS to $2.10 and adjusted EPS to $3.75. By increasing its quarterly dividend mid-year, Caterpillar maintains year-over-year dividend growth and stays on track to join the S&P Dividend Aristocrat index at the beginning of 2019. I expect Caterpillar to grow the dividend in the mid single digits this year.

Prediction: 3.9-6.5% increase to $3.20-3.28

Predicted Forward Yield: 3.03-3.10%

Cracker Barrel Old Country Store (NASDAQ:CBRL)

The owner of its eponymous restaurant brand has given guidance of 8% EPS growth for the full year, powered by 7-8 new stores and an expected drop in raw food costs. While this bodes well for Cracker Barrel's 15th annual dividend increase in June, the payout boost will be significantly lower than the 24% average over the last decade and more in line with last year's 4.5% increase.

Prediction: 4.3-8.7% increase to $4.80-5.00

Predicted Forward Yield: 2.91-3.03%

FedEx (NYSE:FDX)

The shipping company rewarded investors with a 60% payout increase last year. This was an outstanding dividend increase, and 2014 and 2015 weren't too shabby for FedEx investors - the company increased its dividend by 33% and 25% in those years, respectively. With the company guiding to a 12% growth in EPS this year, I expect another nice increase for FedEx's 16th consecutive year of dividend growth.

Prediction: 12.5-20.0% increase to $1.80-1.92

Predicted Forward Yield: 0.93-0.99%

General Mills (NYSE:GIS)

General Mills raised its dividend in both the second and third quarters in 2016, giving the consumer brands company year-over-year dividend growth of 7.5%. This is unusual; the company has usually increased the dividend once a year. General Mills should resume this pattern this year. The company recently reaffirmed the full-year guidance of 5-7% EPS growth. While less than the five-year average growth rate of 9.7%, it should give room for a dividend boost (General Mills' 14th consecutive year) in the mid single digits.

Prediction: 4.2-6.3% increase to $2.00-2.04

Predicted Forward Yield: 3.49-3.56%

John Wiley & Sons (NYSE:JW.A)

John Wiley provides published and online books and scientific journals to educational institutions and libraries. Over each of the last two years, the company has increased quarterly dividends by a penny a share. I expect this pattern to continue, as John Wiley is guiding full-year EPS to a decline in the mid single digits. With a current payout ratio of less than 50%, I'll give a small chance to a slightly higher increase. Either way, John Wiley's 24th year of dividend growth will be much less than the five-year average growth rate of 10%.

Prediction: 3.2-4.8% increase to $1.28-1.30

Predicted Forward Yield: 2.51-2.55%

Medtronic (NYSE:MDT)

Like C. R. Bard above, Medtronic provides medical technology solutions for patients and doctors. The company recently reiterated its full-year EPS guidance; Medtronic is looking for adjusted EPS growth around 4-5%. While this won't support the double-digit dividend growth that investors have come to expect over the last two years (resulting in a five-year average growth rate of nearly 12%), the low payout ratio of 40% means that we may see a dividend increase in the high single digits.

Prediction: 7.0-11.6% increase to $1.84-1.92

Predicted Forward Yield: 2.16-2.26%

National Fuel Gas (NYSE:NFG)

Despite warmer weather and cost cuts, this supplier of natural gas to western New York State and parts of Pennsylvania is guiding to 6% growth in EPS. In each of the last eight years, National Fuel has increased its annual dividend by 4 cents, giving the company an unimpressive five-year growth rate of 2.7%. 2017 will be National Fuel's 47th year of dividend growth, and I expect another year of slow dividend growth.

Prediction: 2.5-4.9% increase to $1.66-1.70

Predicted Forward Yield: 2.90-2.97%

Target Corporation (NYSE:TGT)

The national retailer hasn't been able to avoid the woes affecting the retailing sector - first-quarter EPS was down 6.1% year over year to $1.21. This was after full-year 2016 adjusted EPS fell 12.7% to $4.58. Target is expecting the EPS drop to continue and is guiding 2017 EPS to a midpoint of $4.00. The company's current dividend of $2.40 gives a little room for a 46th year of dividend growth, but not near the five-year average growth rate of 16.1%.

Prediction: 6.7-10.0% increase to $2.56-2.64

Predicted Forward Yield: 4.71-4.85%

If you enjoyed this article and would like to find out how my predictions turn out at the end of June, please follow me by clicking the "Follow" button next to my name at the top of the article. Thanks!

Disclosure: I am currently long CAT, EXPD and TGT. 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 CAT, EXPD, TGT.

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.

Additional disclosure: I may take a position in any of the stocks mentioned in this article.

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