Dividend Increases Expected In October 2021

Summary

• Dividends are the foundation of our goal to reach financial freedom.
• Without growth, your dividend income stream will lose purchasing power to inflation.
• If you cannot achieve average dividend growth of at least that percentage, your income stream will be able to cover less, and less, over time.

Athitat Shinagowin/iStock via Getty Images

We are finally in the 4th quarter of 2021. Football season is well under way and the Browns are off to a strong start. Strong run game, great offensive, and defensive lines. They are winning games in a non-flashy manner. Fundamental football. Sounds an awful lot like dividend growth investing, right? Each dividend increase picks up a few yards. Each DRIP gives you a few more. That is why we monitor every increase so closely. Today, we discuss the expected dividend increases in October - the next installment in our monthly series.

Why Dividend Increases Matter

Dividends are the foundation of our goal to reach financial freedom. We continuously invest in dividend growth stocks to grow our passive income. If you haven't figured it out by now, we eat, sleep, and breathe dividends.

If the goal is to produce a passive income stream that will one day cover our expenses, making sure that income stream grows is critical. Without growth, your dividend income stream will lose purchasing power to inflation. Inflation is typically between 2% and 3% annually; although, it has been higher the last few months (4.2% in April and over 3% in May). Therefore, if you cannot achieve average dividend growth of at least that percentage, your income stream will be able to cover less, and less, over time.

That is why dividend growth is a major deciding factor in all of our stock purchase decisions. It is the 3rd metric of our Dividend Stock Screener for a reason. For each stock, we review a company's history of increasing dividends (consecutive annual dividend increases) and a company's five-year average dividend growth rate.

Actual Dividend Increases in September 2021

September featured some heavyweight dividend growth stocks. These companies are some of the best dividend growth stocks, including one of our Top 5 Foundation Dividend Stocks. The big companies did not disappoint either. If you are a dividend growth investor, you aren't going to want to miss the following dividend increases.

Let's start with McDonald's (MCD), one of our favorites. This year, they actually remembered to announce their dividend increase in October this year (unlike last year's surprise November increase). Their announced 7% dividend increase was in line with the Golden Arches' 5-year dividend growth rate. We will take some extra fries.

McDonald's was just part of the fun. Microsoft (MSFT) delivered some huge news to dividend investors as well. No, not the highly anticipated launch of Windows 11. Microsoft announced a double-digit 10.7% dividend increase. That alone was great to shareholders, but the fun didn't stop there. They announced a $60b share buyback program as well. Cha-ching.

The best of the rest for the month included the following dividend companies that we featured in our September article. You won't want to miss the increases. Of course, there were plenty of other companies too that we couldn't feature.

• Lockheed Martin (LMT) - 7.7% dividend increase
• Starbucks (SBUX) - 8.9% dividend increase
• Philip Morris (PM) - 4.2% dividend increase

Bottom line... nothing beats watching your dividend income grow without lifting a finger. Money in the bank.

Expected Dividend Increases in October 2021

With September behind us, now let's move towards October. It will be yet another exciting month of dividend increases. There will be 5 dividend increases that we are expecting (for sure). Further, there is one stock that we will be keeping a close eye on. They haven't announced a dividend increase in 2021 yet. However, in order for them to keep their Dividend Aristocrat status, they will have to do it this month. Let's see the expected dividend increases in October.

Dividend Stock #1: Visa (V) - Talk about stocks that are built for 2021 and beyond. Visa and Mastercard (MA) continue to dominate. Everyone has a Visa in their wallet. If you don't, chances are people in your household do. Visa is a low yield, high dividend growth stock. Their current dividend yield is well below 1%. However, they make up for it with an 18%+ average dividend growth rate. I'm expecting a dividend increase in line with their recent average.

Last year's dividend increase - 6.67%

Five-year average DGR - 18.15%

Expected timing of Dividend Increase Announcement - End of the month

Company #2: AbbVie (ABBV) - Next on the list, one of our favorite pharmaceutical companies that continues to show strong signs of undervaluation. My wife has been building her position in AbbVie over the last month and now owns 19+ shares. The company has a very low P/E Ratio, perfect dividend payout ratio, and a dividend yield of nearly 5% at the moment. Did we mention that AbbVie has a recent history of crushing dividend increases as well? For a high dividend yield stock, the fact that they have increased their dividend 18% on average is absolutely wild. Keep an eye out for this increase in the final week of the month. It will either be at the end of October or the first few days of November... Stay tuned.

Last year's dividend increase - 6.67%

Five-year average DGR - 18.35%

Expected timing of Dividend Increase Announcement - End of the month

Company #3: American Electric Power (AEP) - Headquartered in the great buckeye state, AEP is a rock solid, consistent utility company that has been a staple of my dividend portfolio for years. AEP has been remarkably consistent from a dividend growth perspective. As you can see below, their dividend increase from last year was in line with its 5 year average dividend growth rate. If you look at the previous years, the story is the same. I wouldn't expect anything different in October 2021 for the company yielding over 3.6%.

Last year's dividend increase - 5.7%

Five-year average DGR - 5.74%

Expected timing of Dividend Increase Announcement - End of the month

Company #4: V.F. Corporation (VFC) - With brands like VF Corp, it has to be good, right? Hear of Supreme, Timberland, NorthFace, it is no surprise the company has been a strong dividend growth stock over the years. Although, truth be told, their 2.1% dividend increase last year left a little to be desired. Keep an eye out for 2021 to see if the company reverses the trend.

Last year's dividend increase - 2.1%

Five-year average DGR - 5.92%

Expected timing of Dividend Increase Announcement - Middle of the month

Company #5: RPM International (RPM) - Coming back to Ohio, we have RPM International. The company produces sealants, specialty coatings, and business materials. One of their most recognizable brands is Tremco. The company has quietly amassed a strong dividend growth streak, which always makes the two of us happy. Plus, on top of it, the company is yielding near 2% at the moment.

Last year's dividend increase - 5.5%

Five-year average DGR - 6.71%

Expected timing of Dividend Increase Announcement - Beginning of the month

Potential Increase: Exxon Mobil (XOM) - Last, but definitely not least, is Exxon Mobil. The oil giant's Dividend Aristocrat status is potentially on the line in the fourth quarter. In order to remain an Aristocrat a company must pay a larger dividend to shareholders in the current year than the previous year. Since the company has not increased its dividend since 2019, if Exxon doesn't increase its 4th quarter 2021 dividend, its 2021 dividend payments will equal its 2020 dividend payments to shareholder. Thus, the streak will end. Let's see if management gives a small bump, which is what I'm predicting. I think Exxon's management team will increase its quarterly dividend by a fraction of a penny. We featured Exxon on our YouTube Channel recently, performing a dividend stock showdown comparing it to Chevron.

Summary

There we have it. 5 companies are set to increase its dividend on schedule. One company, Exxon, is a speculative dividend increase due to the fact that the increase would keep their Dividend Aristocrat streak alive. Regardless of what happens, we just have a blast following dividend news and watching our passive income grow.

Please let us know what other dividend increases you are expecting in October. Further, if you received a dividend increase in September that was not featured, please let us know as well. Let's keep pushing ahead towards financial freedom everyone!

Original Post

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