Expected Dividend Increases In May 2019

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Includes: AAPL, CAH, CAT, CB, GWW, IBM, JNJ, KMI, LEG, LOW, PG, SO, XOM
by: Dividend Diplomats
Summary

We've noticed a trend of slowing dividend growth during the year.

In the previous month's article, we projected 8 companies would increase their dividend.

May also has a lot of companies that are expected to announce a dividend increase.

This month, let's ignore the fluff and get right into it. For those of you that are new, each month we discuss companies that are expected to announce a dividend increase before the calendar flips again. We also summarize the previous month's results. There were a TON of dividend increases in April and we need to start summarizing them right away. Here are the expected dividend increases in May 2019.

Actual Dividend Increases in April 2019

We always start by summarizing the results from the previous month. We've noticed a trend of slowing dividend growth during the year. It will be interesting to see if the trend reversed in April. In the previous month's article, we projected 8 companies would increase their dividend. Let's see if they delivered.

  • Company #1: Procter & Gamble (NYSE:PG) - A Dividend Aristocrat and Top 5 Foundation Stock is going to start this list off. PG is one of my personal favorite holdings. I've absolutely loved the turnaround in the company and the stock's performance over the last year. Talk about appreciation! With such strong appreciation, I was expecting a very nice dividend increase to follow. However, the company only increased their quarterly dividend 4%. Not the strongest increase for the consumer staple giant.
  • Company #2: Johnson & Johnson (NYSE:JNJ) - The end of April was exciting. There were a lot of dividend increases announced in the last 10 days of April. JNJ is one of my favorite Aristocrat holding and I'm sure I'll be supporting their bottom line now that we have a baby. Their dividend increase in 2019 was quiet and uneventful. The company increased their quarterly dividend $.05 per share, or 5.5%. Once again, an average dividend increase. Looks like the trend of slower dividend growth persists.
  • Company #3: International Business Machines (NYSE:IBM) - We were very excited for this increase. IBM is closing in on an Aristocrat status. IBM announced a major acquisition in Red Hat (NYSE:RHT) that used A LOT of cash. I was hopeful they would surpass their 5-year average dividend growth rate of 10.69%, but I wasn't expecting it. Slowly over the month, I set my expectations lower and lower. So I was not shocked when the company announced a 3.2% dividend increase at the end of the month.
  • Company #4: Kinder Morgan Inc (NYSE:KMI) - KMI has telegraphed this dividend increase for years. We all know KMI's story. The company cut their dividend years ago in an effort to clean up their balance sheet. Once the debt was under control, management announced an aggressive plan to increase their dividend. 2018 was the first of those dividend increases. In 2019, the company continued with a 25% dividend increase. Music to our ears.
  • Company #5: Exxon Mobil (NYSE:XOM) - The good times continue to roll. KMI provided this listing with a nice jolt. Now, it is time to shift gears back to a Dividend Aristocrat. My wife and I started building our XOM position at the end of 2018. Clearly we were excited for this dividend increase. XOM announced a 6.1% increase in their quarterly dividend in April. The increase may not seem great. But it is very solid compared to the oil industry's recent dividend history. Dividend growth slowed when the price of oil plummeted a few years ago. Slowly, dividend growth is returning.
  • Company #6: Southern Company (NYSE:SO) - SO is the first position on this listing that I do not own. That's pretty good so far. We told you April was insane! SO is a utility company that has a higher yield with lower dividend growth. Thus, it was not surprising when the company only increased their quarterly dividend $.02 per share, or 3.3%, in April.
  • Company #7: W.W. Grainger (NYSE:GWW) - Grainger, Grainger, Grainger. This will always be one of my favorite purchases that Lanny made over the years. It was a fun, exciting story Grainger's dividend increases have fallen between 5%-8% on average over the last five years. We were not expecting a double-digit dividend increase this year as a result. This month, the company announced a 5.8% increase in their quarterly dividend. Right in line with their recent history. Consistency is key here.
  • Company #8: Apple Inc. (NASDAQ:AAPL) - Last, but definitely not least, Apple. Apple waited until April 30th to make their announcement. The expectations were high, for me at least, given their cash position and their recent strong five-year dividend growth rate. While Apple delivered some exciting news that sent their stock price increasing, the dividend increase was less than stellar. Apple announced only a 5.5% increase in their quarterly dividend.

Expected Dividend Increases in May 2019

Wow, that was exhausting. Isn't it easy to see why we love April? Well, guess what? May also has a lot of companies that are expected to announce a dividend increase. So let's not mess around. Here are the companies that are expected to announce (or have already announced) dividend increases in May.

  • Company #1: Caterpillar (NYSE:CAT) - Alright, technically CAT already announced their dividend increase. And boy was it an awesome one. CAT announced a 20% increase in their quarterly dividend. You read that right, a 20% dividend increase. Luckily, my wife holds shares in her Roth IRA. We will get to enjoy this one. And congratulations to Lanny and all the other shareholders out there that realized this dividend increase as well.
  • Company #2: Chubb Limited (NYSE:CB) - Chubb's recent history is pretty straight forward. The company has announced a >$.02 per share increase in their quarterly dividend each year (in recent history). Typically, I focus on the percent increase. But instead, for Chubb, I'm just going to expect another $.02 per share increase in their quarterly dividend. Easy enough, right?
  • Company #3: Lowe's Companies, Inc. (NYSE:LOW) - This dividend increase will either come right at the end of May or the beginning of June. LOW announced in June the last two years and in May the two years before that. So who knows when it will actually be. However, when it arrives, it should be a great one. LOW has a five-year average dividend growth rate of over 20%. Unfortunately though, I am a Home Depot (NYSE:HD) fan myself and will buy most of my home improvement products there.
  • Company #4: Leggett & Platt, Incorporated (NYSE:LEG) - LEG is a position that was new to my portfolio in 2018. I continued to aggressively build my position in the company as the stock price continued to fall during the year. I used the opportunity to lower my cost basis in the Dividend Aristocrat. Now, with a nice position, I am REALLY looking forward to this upcoming dividend increase. LEG's five-year average dividend increase is just over 5%. Hopefully, the company has a surprise in store for me. **Update** On the day the article was published, LEG announced a 5.3% increase in their quarterly dividend.
  • Company #5: Cardinal Health (NYSE:CAH) - Similar to LEG, CAH is an Aristocrat that I own. While I started a position prior to 2018, I used a price decrease in 2018 to lower my cost basis in the healthcare giant. I'm taking the long view with CAH. Last year, CAH increased their quarterly dividend by just over $.01 per share. The dividend increases have slowed recently and I'm not expecting that to change in 2019.

Summary

That was an exhausting list. May should deliver as exciting results as April. Who knows, maybe dividend increase will suddenly spike. But hopefully this article shows why we are such avid fans of dividend investing. The power of dividend investing is real. Hopefully you look forward to receiving dividend increases as much as we do.

What dividend increases did you receive in April? What dividend increases are you expecting in May? Were you disappointed with the dividend increases summarized above? Barely any of the companies that increased their dividend in April exceeded 10%. To me, the most shocking were IBM and Apple.

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.