This is the latest in my series of articles where I provide predictions of annual dividend increases for a variety of long-term dividend growth companies. Back at the end of September, I provided predictions for 17 dividend growth companies that have historically announced annual payout increases in September. In this article I'll look at 15 more dividend growth companies that I expect to announce dividend increases in the first half of November.
Before I do that, there were three other companies with long-term dividend growth histories that announced increases in October:
- After a 2-for-1 stock split earlier this year, electronics manufacturer Amphenol (APH) announced a 38% dividend increase to an annualized 80 cents a share. This marks the 10th year of dividend growth for Amphenol and gives the company a forward yield of 1.04%.
- Rockwell Automation (ROK) extended its dividend growth streak to 11 years with a 4.7% increase to $4.48, giving the manufacturing company a forward yield of 1.40%.
- Biopharmaceutical company AbbVie (ABBV) announced an 8.5% increase to increase its annual payout to $5.64. This will make the 10th annual increase since being spun off from Abbott Labs in 2013. After the stock popped 4.5% on the earnings release, AbbVie now yields 4.92%.
Here are the results from the October article (the original predictions are available here), followed by my predictions for the dividend increases that I'm expecting to be announced in the first half of November:
(All yields are based on stock prices at the market close on Friday, October 29th.)
Results for Dividend Increase Announcements from October
American Electric Power (AEP) - 13 years of dividend increases
Prediction: 4.7 - 6.8% increase to $3.10 - $3.16
Actual: 5.4% increase to $3.12
Forward yield: 3.68%
This utility is committed to an EPS growth rate of between 5% and 7%, which supports dividend growth in the same range.
A.O. Smith Corporation (AOS) - 29 years
Prediction: 19.2 - 23.1% increase to $1.24 - $1.28
Actual: 7.7% increase to $1.12
Forward yield: 1.53%
Despite expectations of 30% EPS growth, the manufacturer of hot water heaters and boilers came in with an increase well below its average growth rate.
Black Hills Corporation (BKH) - 52 years
Prediction: 5.3 - 8.0% increase to $2.38 - $2.44
Actual: 5.3% increase to $2.38
Forward yield: 3.59%
As expected, utility Black Hills announced a 5% boost.
Brown & Brown (BRO) - 29 years
Prediction: 8.1 - 13.5% increase to $0.40 - $0.42
Actual: 10.8% increase to $0.41
Forward yield: 0.65%
With 40% EPS growth so far this year on top of last year's 20% EPS growth, the insurer was able to reward investors with a double-digit boost.
Calavo Growers (CVGW) - 10 years (no increase in 2021)
Prediction: 4.3 - 6.1% increase to $1.20 - $1.22
Actual: 0% increase to $1.15
Forward yield: 2.86%
Despite swinging to EPS growth this year after posting a loss in 2020, the marketer of fresh produce ends its dividend growth record at 9 years.
DTE Energy Company (DTE) - 14 years
Prediction: 4.8 - 6.1% increase to $3.46 - $3.50
Actual: 7.3% increase to $3.54
Forward yield: 3.12%
The utility rewarded investors with a payout boost in line with its projections for forward EPS growth.
Gorman-Rupp Company (GRC) - 50 years
Prediction: 8.1 - 12.9% increase to $0.67 - $0.70
Actual: 9.7% increase to $0.68
Forward yield: 1.60%
Gorman-Rupp compensated for a sub-par boost last year with this year's increase.
Lincoln Electric Holdings (LECO) - 28 years
Prediction: 9.8 - 12.7% increase to $2.24 - $2.30
Actual: 9.8% increase to $2.24
Forward yield: 1.57%
The manufacturer of industrial welding equipment continues to build its dividend growth rate of 10% with this year's increase.
Middlesex Water Company (MSEX) - 50 years
Prediction: 1.8 - 3.7% increase to $1.11 - $1.13
Actual: 6.4% increase to $1.16
Forward yield: 1.05%
This is the 2nd straight year of 6% dividend growth for the New Jersey-based utility.
Northwest Natural Holding Company (NWN) - 67 years
Prediction: 0.5 - 1.0% increase to $1.93 - $1.94
Actual: 0.5% increase to $1.93
Forward yield: 4.28%
Utility Northwest Natural extends its record of penny-per-share annual increases to 7 years.
Prosperity Bancshares (PB) - 25 years
Prediction: 4.1 - 6.1% increase to $2.04 - $2.08
Actual: 6.1% increase to $2.08
Forward yield: 2.76%
Despite relatively slow EPS growth, this is Prosperity's 2nd year of 6% dividend growth.
RPM International (RPM) - 49 years
Prediction: 6.6 - 10.5% increase to $1.62 - $1.68
Actual: 5.3% increase to $1.60
Forward yield: 1.83%
The latest dividend boost from the supplier of specialty chemicals for the home and homebuilders market was slightly below the company's 6% average growth rate.
Stepan Company (SCL) - 55 years
Prediction: 9.8 - 14.8% increase to $1.34 - $1.40
Actual: 9.8% increase to $1.34
Forward yield: 1.12%
With 35% EPS growth in the first half of 2021, chemical manufacturer Stepan is benefitting from the post-pandemic economic growth and is sharing that with its investors.
Standex International (SXI) - 12 years
Prediction: 8.3 - 14.5% increase to $1.04 - $1.10
Actual: 8.3% increase to $1.04
Forward yield: 0.93%
This engineering and scientific company slows its payout growth below the company's 15% long-term growth rate.
Tompkins Financial Corporation (TMP) - 36 years
Prediction: 4.6 - 6.5% increase to $2.26 - $2.30
Actual: 5.6% increase to $2.28
Forward yield: 2.78%
The regional bank company accelerated its dividend growth from last year's 4% boost.
V. F. Corporation (VFC) - 50 years
Prediction: 5.1 - 7.1% increase to $2.06 - $2.10
Actual: 2.0% increase to $2.00
Forward yield: 2.74%
Impacted by the hit to retail last year during the pandemic, apparel manufacture V. F. Corporation boosted its annual dividend by a minimal 4 cents to keep its streak going.
Waste Connections Inc. (WCN) - 12 years
Prediction: 12.2 - 14.6% increase to $0.92 - $0.94
Actual: 12.2% increase to $0.92
Forward yield: 0.68%
Boosted by a $1.5 billion debt issuance, Waste Connections continued its record of double-digit growth.
Predictions for Dividend Increases in the First Half of November
Here are my predictions for the 15 dividend increases I expect in the first half of November:
AmerisourceBergen Corporation (ABC) - 16 years
AmerisourceBergen is a large player in healthcare and pharmaceutical supply chains and logistics. Although the company has a decade-long dividend growth rate of more than 20%, over each of the last 5 years the annual dividend increase has been only 8 cents, resulting in last year's boost of less than 5%. The company GAAP earnings got crushed last year from costs associated with settling opioid lawsuits, with losses of more than $16 per share. While that seems to be behind AmerisourceBergen and adjusted EPS growth is expected to be in the high teen percentages, I expect the company to hold back a bit on its payout growth. Expect a 6th year of 8 cent growth, with the possibility of something slightly larger.
Prediction: 4.5 - 6.8% increase to $1.84 - $1.88
Predicted Forward Yield: 1.51 - 1.54%
Automatic Data Processing (ADP) - 45 years
The business services company continues to steadily grow earnings and reward investors. Although last year's 2% increase was far below the company's 12% growth rate over the last 5 years, it is clear that the smaller increase was driven by the economic recession. As the U.S. comes out of the pandemic, ADP is expecting good growth to return and is guiding to adjusted EPS growth of 10% in fiscal 2022. Until the company realizes these earnings, investors can expect smaller-than-normal dividend growth.
Prediction: 2.2 - 4.3% increase to $3.80 - $3.88
Predicted Forward Yield: 1.69 - 1.73%
Assurant (AIZ) - 17 years
Assurant provides specialty insurance contracts for consumers and businesses. For example, that extended service contract that you purchased for your cell phone is probably backed by Assurant. After seeing earnings slow down from 2016 to 2018, things have picked up for the company. The company is also looking at an additional 10 - 14% growth in operating income in 2021. Given this, and the company's modest debt load, I'm expecting this year's payout to accelerate from last year's 5% boost.
Prediction: 6.1 - 9.1% increase to $2.80 - $2.88
Predicted Forward Yield: 1.74 - 1.79%
Atmos Energy Corporation (ATO) - 37 years
Investors in the Dallas-based natural gas utility saw accelerated dividend growth prior to the pandemic, as the economy was growing and there was extensive oil and natural gas exploration in the Permian basin. And despite last year's recession, Atmos rewarded investors with a nearly 9% income boost. This year, however, investors should lower their expectations, as the company is expecting flat to slow (0 - 4%) EPS growth this year. Assuming Atmos has correctly hedged for the increasing costs of natural gas, the slow EPS growth should support a small dividend boost this year.
Prediction: 2.4 - 4.0% increase to $2.56 - $2.60
Predicted Forward Yield: 2.78 - 2.82%
Emerson (EMR) - 64 years
Industrial manufacturer Emerson has one of the longest dividend growth streaks among all publicly traded companies, having started growing its dividend during the presidential administration of Dwight Eisenhower. The company is a worldwide manufacturer of industrial control systems and associated software, and divides up its business into two lines: Automation Solutions and Commercial and Residential Solutions. The company's dividend growth has slowed over the years, falling to 1% last year. Anyone expecting a big boost this year will probably be disappointed. Although Emerson is expecting 2021 EPS growth to come in at 17%, this will follow a 6% drop in EPS in 2020. Investors can expect the company to announce another small increase, although there's a chance it will be a little larger than last year's.
Prediction: 1.0 - 3.0% increase to $2.04 - $2.08
Predicted Forward Yield: 2.10 - 2.14%
Evergy (EVRG) - 16 years
Evergy is the parent company for Kansas City Power & Light and Westar Energy, and provides 1.6 million customers in eastern Kansas and western Missouri with electrical service. The utility grew adjusted EPS by 7% in 2020 and also recently reaffirmed a long-term adjusted EPS growth rate objective of 6% to 8% through 2024. For 2021, Evergy midpoint guidance for EPS growth is 6.5%, consistent with the long-term objective. Look for an increase consistent with the company's 5-year dividend growth rate of 7%.
Prediction: 5.6 - 7.5% increase to $2.26 - $2.30
Predicted Forward Yield: 3.55 - 3.61%
Griffon Corporation (GFF) - 10 years
The diversified manufacturer has business lines in tools, commercial and residential garage doors, and defense electronics. Although Griffon has a decent amount of debt, its earnings growth can easily handle it - fiscal 2020 EPS were up 12%, and are being followed up by more than 50% EPS growth in the first 9 months of fiscal 2021. And with a payout yield below 20%, it looks like Griffon will reward investors with a double-digit boost to complete its first decade of dividend growth.
Prediction: 12.5 - 18.8% increase to $0.36 - $0.38
Predicted Forward Yield: 1.36 - 1.43%
Huntington Ingalls Industries (HII) - 9 years
A relative newcomer to the list of dividend growth companies, Huntington Ingalls has routinely grown its payout at double digits in its brief history. The nation's largest shipbuilder is benefitting from the Defense Department's focus on China as a threat; full year EPS grew by 29% in 2020, while the company saw another 24% EPS growth in the first half of 2021. Huntington Ingalls continues to grow through acquisitions as well, having purchased Alion Science and Technology, which provides subject matter expertise to the Defense Department. With the 20%+ EPS growth, investors can expect to see another double-digit dividend boost this year.
Prediction: 10.5 - 12.3% increase to $5.04 - $5.12
Predicted Forward Yield: 2.49 - 2.53%
Hawthorn Bancshares (HWBK) - 9 years
This Missouri-based micro-cap (market capitalization of $150 million) bank has paid dividends since 1996, but reset its dividend growth history in 2010 after cutting its payout. Since then, the company has compounded its payout by nearly 15% annually, including a 25% growth rate over the last 5 years. This includes a 4% stock dividends paid in each of the last 6 years. And although EPS fell by 11% last year during the pandemic, the release of provisions from potential loan losses should boost earnings this year. With a payout ratio near 20%, investors can expect Hawthorn to end its first decade of renewed dividend growth with an increase around 10%.
Prediction: 10.0 - 13.3% increase to $0.66 - $0.68
Predicted Forward Yield: 2.75 - 2.84%
Lancaster Colony Corporation (LANC) - 58 years
This debt-free food company owns several regional and national brands, including Marzetti salad dressings and dips, and Sister Schubert's and New York brand breads. Lancaster Colony has rewarded investors well, with a compounded growth rate of nearly 9% over the last decade. With 4% earnings growth to $5.16 per share in fiscal 2021, the company currently sports a payout ratio of 60%, which leaves room for another payout boost, but one less than the long term growth average.
Prediction: 5.3 - 6.7% increase to $3.16 - $3.20
Predicted Forward Yield: 1.86 - 1.88%
Mercury General Corporation (MCY) - 34 years
Insurer Mercury General has benefitted from the run up in the stock markets. While income from insurance operations is down 16% in the first half of the fiscal year, net income more than doubled to $3.90 a share from investment gains. While the excess investment income benefits the company and reduces the payout ratio to 33%, investments are not necessarily repeatable over time. The company has grown dividends by only a penny a share for each of the last 10 years. With the drop in earnings from the company's primary business line and the high payout ratio, investors can expect another year of minimal dividend growth.
Prediction: 0.4% increase to $2.54
Predicted Forward Yield: 4.66%
MDU Resources Group (MDU) - 29 years
MDU started as an electric utility serving Montana and North Dakota back in 1924. Since then it has grown into a $6 billion market cap company with two business lines: its heritage regulated utility business and the manufacture of building materials. The company saw EPS grow by 15% in 2021 and is looking at another 7% EPS growth in 2021, giving MDU Resources room for a good increase. But the company has an 11 year history of 8 cent annual increases and regardless of the earnings growth, I think investors will see a 12th year.
Prediction: 2.4 - 3.5% increase to $0.87 - $0.88
Predicted Forward Yield: 2.83 - 2.86%
Nelnet, Inc. (NNI) - 6 years
Nelnet's business is focused on, and its revenue generated by a portfolio of federally insured student loans. The company has benefitted from the expansion of student indebtedness. The company is taking steps to diversify its revenue stream by investing in real estate and other business ventures. Having just started its dividend growth record, Nelnet has an outstanding growth rate of 13% over the last 5 years. And while 2020's adjusted EPS nearly doubled, that appears to be a one-off as adjusted EPS dropped 4% over the first half of 2021. Nelnet has room for another boost this year, but expect dividend growth to continue to slow from last year's 10% increase.
Prediction: 6.8 - 9.1% increase to $0.94 - $0.96
Predicted Forward Yield: 1.14 - 1.16%
Roper Technologies (ROP) - 28 years
Roper Technologies is a diversified technology company that operates a variety of niche business lines, including businesses that design and develop software as well as those that develop engineered products. With a 10-year growth rate of nearly 18%, investors have been rewarded well for their ownership. While EPS took a minor hit in the economic recession in 2020, Roper is expecting EPS to rebound in 2021. That 10% EPS growth guidance means that investors can look forward to a payout increase like last year's 10% boost.
Prediction: 8.9 - 11.1% increase to $2.45 - $2.50
Predicted Forward Yield: 0.50 - 0.51%
Snap-on Incorporated (SNA) - 11 years
Tool manufacturer Snap-on begins its second decade of dividend growth in 2021. Although the company is not providing guidance for 2021 earnings and, in fact, explicitly stating that the effects of the pandemic and the related supply chain disruptions are hindering business, Snap-on still managed to grow its adjusted EPS by 40% in the first 9 months of 2021. With little debt and a payout ratio below 40%, Snap-on should reward investors with another double-digit boost, comparable to last year's boost of 14%
Prediction: 12.2 - 14.6% increase to $5.52 - $5.64
Predicted Forward Yield: 2.72 - 2.78%
October brought a good mix of dividend increases, with double-digit boosts from insurer Brown & Brown and Canadian waste company Waste Connections. Just missing the 10% increase threshold were Gorman-Rupp, Lincoln Electric, and Stepan Company.
November tends to bring a lot of companies announcing annual increases for the 4th quarter. Investors should see 10%+ increases from manufacturer Griffon, shipbuilder Huntington Ingalls, bank holding company Hawthorn Bancshares, and industrial manufacturer Snap-on Tools. Long running dividend growth company Emerson should keep its streak going with a minimal increase. And while Emerson's dividend growth may not keep up with current inflation, over the long term, ownership in dividend growth companies will provide investors with a continually growing income.