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. At the end of October, I provided predictions for 15 dividend growth companies that have historically announced annual payout increases in the first half of November. In this article I’ll look at another 14 dividend growth companies that I expect will announce their annual dividend increases in the second half of November.
Before I get to that, here is one other long-term dividend growth company that announced its annual increase in the first half of November:
- Insurer Aflac (AFL) announced a 5.0% dividend increase to an annual rate of $1.68. This is the company’s 41st year of dividend growth and this increase gives AFLAC a forward yield of 2.39%.
Here are the results from my predictions from the first half of November (as always, the original predictions are available here), followed by my predictions for the dividend increases that I’m expecting to be announced in the second half of November:
(All yields are based on stock prices at the market close on Friday, November 11th.)
AmerisourceBergen Corporation (ABC) - 18 years of dividend growth
Prediction: 4.3 – 6.5% increase to $1.92 - $1.96
Actual: 5.4% increase to $1.94
Forward yield: 1.27%
The pharmaceutical supply chain company broke its 7-year streak of 8-cent dividend increases this year with a 12-cent boost.
Automatic Data Processing, Inc. (ADP) - 47 years
Prediction: 10.6 – 12.5% increase to $4.60 - $4.68
Actual: 20.2% increase to $5.00
Forward yield: 2.01%
ADP continues its record of double-digit dividend growth.
Assurant, Inc. (AIZ) - 18 years
Prediction: 2.9 – 4.4% increase to $2.80 - $2.84
Actual: 2.9% increase to $2.80
Forward yield: 2.18%
It’s another year of 3% dividend growth for investors in the specialty insurer.
Atmos Energy Corporation (ATO) - 38 years
Prediction: 8.1 – 9.6% increase to $2.94 - $2.98
Actual: 8.8% increase to $2.96
Forward yield: 2.67%
The Dallas-based natural gas company continues to grow its payout in the high single digits.
Becton, Dickinson and Company (BDX) - 50 years
Prediction: 4.6 – 5.7% increase to $3.64 - $3.68
Actual: 4.6% increase to $3.64
Forward yield: 1.60%
The medical device manufacturer continues its pattern of modest dividend growth.
Calavo Growers (CVGW) – 9 years
Prediction: 0.9 – 1.7% increase to $1.16 - $1.17
Actual: 0% increase to $1.15
Forward yield: 3.27%
The producer of avocados and other fresh vegetables moved from an annual dividend payment to quarterly payments and kept its dividend payout steady.
DTE Energy Company (DTE) – 12 years
Prediction: 1.1 – 2.3% increase to $3.58 - $3.62
Actual: 7.6% increase to $3.81
Forward yield: 3.33%
The Detroit-based utility’s dividend boost is right in line with the 7% operating EPS growth.
Emerson Electric Co. (EMR) - 65 years
Prediction: 1.9 – 3.9% increase to $2.10 - $2.14
Actual: 1.0% increase to $2.08
Forward yield: 2.18%
Emerson keeps its long dividend growth streak going with another small increase.
Evergy, Inc. (EVRG) - 19 years
Prediction: 2.2 – 3.5% increase to $2.34 - $2.37
Actual: 7.0% increase to $2.45
Forward yield: 4.13%
Despite flat EPS, the Missouri-based utility rewarded investors with its second straight 7% boost.
Griffon Corporation (GFF) - 11 years
Prediction: 5.6 – 11.1% increase to $0.38 - $0.40
Actual: Deferred to late November
The home storage and garage door company should announce its latest increase before Thanksgiving.
Huntington Ingalls Industries, Inc. (HII) - 10 years
Prediction: 8.1 – 10.2% increase to $5.10 - $5.20
Actual: 5.1% increase to $4.96
Forward yield: 2.18%
The shipbuilder’s earnings got hit with additional pension costs.
HP Inc. (HPQ) - 13 years
Prediction: 8.0 – 14.0% increase to $1.08 - $1.14
Actual: Deferred to late November
HP should announce its latest dividend boost the week of November 14th.
Lancaster Colony Corporation (LANC) - 60 years
Prediction: 0 – 2.5% increase to $3.20 - $3.28
Actual: 6.3% increase to $3.40
Forward yield: 1.66%
Despite a drop in earnings, the food company rewarded investors with an outsized dividend boost.
MDU Resources Group, Inc. (MDU) - 31 years
Prediction: 2.3% increase to $0.89
Actual: Deferred to late November
The natural gas utility should announce its annual dividend increase in the second half of November.
Nelnet, Inc. (NNI) - 8 years
Prediction: 8.3 – 12.5% increase to $1.04 - $1.08
Actual: 8.3% increase to $1.04
Forward yield: 1.09%
The credit servicer dedicates a significant amount of free cash flow to share buybacks so, despite 34% EPS growth in the first half of the year, dividend growth was limited to single digits.
Roper Technologies, Inc. (ROP) - 29 years
Prediction: 9.7 – 12.9% increase to $2.72 - $2.80
Actual: 10.1% increase to $2.73
Forward yield: 0.62%
The diversified manufacturer was able to maintain its double-digit growth rate despite flat earnings due to a low payout ratio.
Snap-on Incorporated (SNA) - 13 years
Prediction: 14.1 – 15.5% increase to $6.48 - $6.56
Actual: 14.1% increase to $6.48
Forward yield: 2.77%
The tool manufacturer kept its mid-teens dividend growth rate going.
Waste Connections, Inc. (WCN) – 12 years
Prediction: 10.8 – 15.2% increase to $1.02 - $1.06
Actual: 10.8% increase to $1.02
Forward yield: 0.75%
It is another year of double-digit payout growth for investors in this Canadian waste services company.
There are 14 companies I expect to announce their annual dividend increases in the first half of November. First, here are my predictions for three featured companies:
Agilent Technologies (A) – 11 years of dividend growth
Agilent provides advanced hardware, software and services for the medical industry. The company has been growing quickly and rewarding investors in the process – over the last decade, the company has compounded its payout by nearly 20% annually. However, that growth has slowed over the last few years; the company’s 5-year growth rate is “only” 10%, and last year Agilent boosted its dividend by 8%. The more recent dividend growth corresponds to Agilent’s focus to buying back stock, and since 2017 the company has repurchased 5.6% of all outstanding shares. So what will Agilent do this year? Well, the company grew adjusted EPS by 32% in 2021, and is guiding to a further 17% in 2022. Investors will reap the benefits and will see a return to double-digit dividend growth from Agilent.
Prediction: 11.9 – 16.7% increase to $0.94 - $0.98
Predicted Forward Yield: 0.63 – 0.66%
Merck & Co. (MRK) – 12 years
With only 12 years of dividend growth, pharmaceutical mega-cap Merck is relatively new to the list of dividend growth companies. The company’s growth rate is pretty modest, with 5-year and 10-year compounded growth rates of 8% and 5%, respectively. Merck has several drugs that are driving sales and earnings growth right now – Keytruda is an anti-cancer drug and Gardasil is a vaccine against the Human Papillomavirus Virus (HPV). Sales for those two drugs are growing at double-digits – in 20% for Keytruda and 44% for Gardasil, which is driving continued earnings growth for Merck. After growing sales 17% in 2021, the company is looking at another 20% in 2022, along with adjusted EPS growth of 22%. Merck also continues to buy back its shares and has retired 7.3% of them since 2017. The only significant headwind (aside from the natural lifecycle of older drugs as they come off of patent protection) is a 4% hit to EPS from the strong dollar. Nevertheless, Merck has plenty of room for another mid-single digit dividend boost in November.
Prediction: 4.2 – 7.2% increase to $2.88 - $2.96
Predicted Forward Yield: 2.94 – 3.02 %
NIKE, Inc. (NKE) – 21 years
Like many worldwide companies, Nike’s revenues and earnings are suffering from the currency effects of a strong U. S. dollar. The company’s revenues are also suffering from higher markdowns as Nike gets rid of excess inventory. Nike has a good dividend growth record, compounding its payout at more than 13% over the last decade. And while there are headwinds that the company is fighting, Nike still managed to grow revenues and EPS by 5% in fiscal 2022 (which ended May 31, 2022). In addition, the company has a manageable amount of debt and a low payout ratio below 35%. So while 2022’s EPS growth didn’t keep up, investors can still look forward to a double-digit boost in late November.
Prediction: 9.8 – 14.8% increase to $1.34 - $1.40
Predicted Forward Yield: 1.26 – 1.32%
Here are my predictions for the 11 other companies which should announce annual increases in the second half of November:
|Company||# Yrs||Industry||Prediction (%)||New Annual Rate|
|American Equity Investment Life Holding Co. (AEL)||18||Insurance - Life||5.9% - 8.8%||$0.36 - $0.38|
|American Equity Investment markets and sells insurance and annuity products. Unlike most companies, AEL pays its dividend annually. With adjusted EPS of $3.90 in 2021, the company’s payout ratio – at 9% – is extremely low, which means it’s less sensitive to drops in EPS. So although AEL is looking at flat EPS in 2022, investors can expect another 2-cent dividend increase – AEL’s 9th straight year.|
|Brown-Forman Company (BF-B)||38||Food & Beverages||3.0% - 5.0%||$0.777 - $0.792|
|The owner of many well-known alcohol brands, including Jack Daniel’s Whiskey and Finlandia Vodka, generally boosts its dividend in the low-to-mid single digits, and occasionally issues a special dividend. Although EPS are down a bit, look for Brown-Forman to continue with the modest dividend boosts.|
|CubeSmart (CUBE)||13||REIT - Industrial||14.0% - 18.6%||$1.96 - $2.04|
|Self-storage REIT CubeSmart saw adjusted funds from operations (FFO – a metric for REITs that’s similar to EPS) grow 22% in 2021 and is projecting another 20% growth in 2022. While investors probably won’t see another 26% boost like last year’s, the company will still likely reward investors with an increase in the high teens.|
|Hormel Foods Corporation (HRL)||56||Packaged Foods||5.8% - 9.6%||$1.10 - $1.14|
|Although the maker of Spam and other foods is looking at double-digit growth, it has revised its guidance lower multiple times since the beginning of the year due to continued inflation. Given this, I think Hormel will hedge a bit on this year’s boost, similar to last year’s 6% increase with the possibility of something a little larger.|
|Matthews International Corporation (MATW)||27||Conglomerates||4.5% - 9.1%||$0.92 - $0.96|
|Conglomerate Matthews is being hit hard by inflation, supply chain issues and write-downs on its Eastern European business. While sales are up, EPS is likely to drop by 7 – 10%, meaning it’ll be a 5th year of 4 – 8 cent annual dividend growth.|
|McCormick & Company (MKC)||23||Packaged Foods||6.8% - 9.5%||$1.58 - $1.62|
|The spices and flavoring company, owner of the Old Bay, Zatarain’s and eponymous McCormick brands, among others, is looking at a fall of 13% in adjusted EPS due to the strength of the dollar and impacts from inflation. Even so, the company’s payout ratio of 55% leaves room for a boost in the high single-digits.|
|Motorola Solutions (MSI)||11||Communication Equipment||9.5% - 11.4%||$3.46 - $3.52|
|Unlike other companies, Motorola Solutions is managing through difficult economic and geopolitical times. Despite the effects of shutting down its business in Russia and the strong dollar, the security company is guiding to adjusted EPS growth of 11%, consistent with the company’s long-term dividend growth rate.|
|RGC Resources (RGCO)||22||Utilities - Regulated Gas||2.6% - 5.1%||$0.80 - $.082|
|This small-cap natural gas utility has boosted its dividend by 4 cents in each of the last 6 years. With adjusted EPS falling by 11% in the twelve months ending June 30, 2022, RGC Resources has little room for a larger increase. In fact, the company might decide to slow dividend growth this year.|
|Royal Gold (RGLD)||20||Precious Metals||11.4% 14.3%||$1.56 - $1.60|
|Revenue and EPS are down a bit so far this year at the precious metals producer, due mostly to decreasing prices on gold and silver. Royal Gold has a payout ratio well below 50%, giving the company plenty of room to continue its double-digit dividend growth rate.|
|Spire (SR)||19||Utilities - Regulated Gas||3.6% - 5.1%||$2.84 - $2.88|
|The natural gas utility consistently boosts its dividend in the 4 – 5% range. With EPS predicted to fall 20% this year which will push Spire’s payout ratio to 70%, investors can expect another year of mid-single digit growth.|
|The York Water Company (YORW)||25||Utilities - Regulated Water||4.0% - 6.0%||$0.8108 - $0.8264|
|The PA-based water and wastewater utility has paid dividends for more than 150 years. With 6% EPS growth in the first 9 months of 2022, York Water is ready to start its 2nd quarter century of dividend growth.|
The first half of November brought a flurry of modest dividend increases, with long-time dividend growth companies Emerson and Lancaster Colony both extending their 60-year plus record. Emerson continued its history of very small increases while Lancaster Colony began its 7th decade of dividend growth with a larger-than-expected 6.3% increase.
Among the companies rewarding investors with 10%+ payout boosts, most notable was ADP with another massive increase – this time a 20% increase. Also in the “10% club” this month are Roper Technologies, Snap-On Tools, and Waste Connections.
Coming up in the second half of November, investors can expect double-digit increases from Agilent Technologies, Nike, CubeSmart, and Royal Gold.
I hope all of my readers in the United States a very happy Thanksgiving holiday!
This article was written by
Disclosure: I/we have a beneficial long position in the shares of DTE, EVRG either through stock ownership, options, or other derivatives. 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: In addition, I may take a position in any of the stocks mentioned in this article in the near future.