That is the most recent in my sequence of articles the place I present predictions of annual dividend will increase for a wide range of long-term dividend development corporations. On the finish of December, I offered predictions for 13 dividend development corporations which have traditionally introduced annual payout will increase in January. On this article, I will assessment these dividend will increase and check out one other 22 dividend development corporations that I anticipate will announce their annual dividend will increase within the first half of February.
Earlier than I get to that, there have been three different long-term dividend development corporations that introduced its annual enhance in January:
– Waste Administration (WM) introduced a 7.7% dividend enhance to an annualized $2.80. That is the twentieth yr of dividend development for the trash and recycling firm, and offers the corporate a ahead yield of 1.83%.
– Power mega-cap firm Chevron (CVX) introduced its thirty sixth yr of dividend development with a 6.3% increase to an annualized $6.04. This newest enhance provides the corporate a ahead yield of three.37%.
– Regional financial institution S&T Bancorp (STBA) prolonged its dividend development streak to 11 years. The corporate’s new annual dividend charge is $1.28, a 3.2% enhance over final quarter and a ten.3% dividend enhance from the identical interval in 2022. S&T Bancorp’s ahead yield is now 3.63%.
Listed below are the outcomes from my predictions from January (as all the time, the unique predictions can be found right here), adopted by my predictions for the dividend will increase that I’m anticipating to be introduced within the first half of February:
(All yields are primarily based on inventory costs on the market shut on Friday, January twenty seventh.)
Outcomes for Dividend Will increase from January
Archer-Daniels-Midland Firm (ADM) – 48 years of dividend development
Prediction: 7.5 – 12.5% enhance to $1.72 – $1.80
Precise: 12.5% enhance to $1.80
Ahead yield: 2.15%
Powered by 45% EPS development in 2021 after which adopted up by 28% EPS development in 2022, Archer-Daniels-Midland rewarded buyers with a great, larger-than-usual double-digit increase.
Air Merchandise and Chemical compounds (APD) – 41 years
Prediction: 9.9 – 12.3% enhance to $7.12 – $7.28
Precise: 8.0% enhance to $7.00
Ahead yield: 2.33%
Though adjusted EPS development was up 15% in fiscal 2022, the economic gases firm hedged a bit on its newest dividend enhance, with a lift under the corporate’s 10% common development charge.
Apogee Enterprises, Inc. (APOG) – 12 years
Prediction: 9.1 – 11.4% enhance to $0.96 – $0.98
Precise: 9.1% enhance to $0.96
Ahead yield: 2.13%
The architectural companies agency continued its historical past of dividend development within the 9 – 10% vary.
Booz Allen Hamilton Holding Company (BAH) – 11 years
Prediction: 10.5 – 15.1% enhance to $1.90 – $1.98
Precise: 9.3% enhance to $1.88
Ahead yield: 2.03%
The protection consulting firm begins its 2nd decade of dividend development with a below-average enhance.
BlackRock, Inc. (BLK) – 14 years
Prediction: 10.0 – 11.9% enhance to $21.48 – $21.84
Precise: 2.5% enhance to $20.00
Ahead yield: 2.63%
With the drop within the inventory market, earnings fell on the funding supervisor leading to one of many smallest will increase in its historical past.
Church & Dwight Co., Inc. (CHD) – 26 years
Prediction: 3.8 – 4.8% enhance to $1.09 – $1.10
Precise: Deferred to early February
The proprietor of client manufacturers together with Arm & Hammer baking soda ought to announce its newest enhance a day or two earlier than it releases full yr earnings on February third.
Cincinnati Monetary Company (CINF) – 62 years
Prediction: 4.3 – 6.5% enhance to $2.88 – $2.94
Precise: 8.7% enhance to $3.00
Ahead yield: 2.85%
Whereas the insurer’s enhance this yr was smaller than final yr’s increase, the 8.7% enhance is above the corporate’s long-term common.
California Water Providers Group (CWT) – 56 years
Prediction: 4.0 – 5.0% enhance to $1.04 – $1.05
Precise: 4.0% enhance to $1.04
Ahead yield: 1.68%
The water utility’s newest dividend enhance is per the corporate’s long-term development charge.
Enterprise Bancorp, Inc. (EBTC) – 30 years
Prediction: 7.3 – 9.8% enhance to $0.88 – $0.90
Precise: 12.2% enhance to $0.92
Ahead yield: 2.68%
Dividend development is accelerating on the regional banking firm, with this yr’s enhance bigger than final yr’s 11% increase.
Consolidated Edison, Inc. (ED) – 49 years
Prediction: 2.5 – 3.8% enhance to $3.24 – $3.28
Precise: 2.5% enhance to $3.24
Ahead yield: 3.41%
The New York-based utility continued its sample of two – 3% dividend development.
Fastenal Firm (FAST) – 24 years
Prediction: 11.3 – 14.5% enhance to $1.38 – $1.42
Precise: 12.9% enhance to $1.40
Ahead yield: 2.79%
The fastener and {hardware} firm continued its sample of double-digit dividend will increase.
Franklin Electrical Co., Inc. (FELE) – 31 years
Prediction: 10.3 – 12.8% enhance to $0.86 – $0.88
Precise: 15.4% enhance to $0.90
Ahead yield: 1.03%
Dividend development on the pumping programs producer accelerated from final yr.
Kimberly-Clark Company (KMB) – 51 years
Prediction: 0.9 – 1.7% enhance to $4.68 – $4.72
Precise: 1.7% enhance to $4.72
Ahead yield: 3.66%
Earnings proceed to drop on the client merchandise firm leading to small dividend will increase.
Predictions for Dividend Will increase for the First Half of February
There are 22 corporations I anticipate to announce their annual dividend will increase within the first half of February. First, listed here are my predictions for 3 featured corporations – all of that are Dividend Kings with at the least 50 years of steady dividend development:
Real Components Firm (GPC) – 66 years
Real Components, a supplier of substitute automotive and industrial elements worldwide, has one of many longest dividend development charges of all publicly traded corporations. Regardless of its measurement – the corporate has a market cap of $23B and is a member of the S&P 500 – Real Components continues to put up good EPS development numbers. After posting EPS development of 31% in 2021, the corporate raised its steering for 2022 and is now anticipating development of greater than 17%.
The corporate focuses on inner investments and returning capital to shareholders within the type of dividends fairly than share buybacks. Real Components has a decade-long dividend development charge of 6%, however rewarded buyers with a ten% increase final yr. Though the corporate has a good debt load, its payout ratio is round 50%, leaving room for one more enhance round 10% this yr.
Prediction: 8.9 – 11.7% enhance to $3.90 – $4.00
Predicted Ahead Yield: 2.35 – 2.41%
3M Firm (MMM) – 64 years
One other giant firm with an extended historical past of dividend development, 3M’s fortunes usually are not going in addition to Real Components’. Regardless of 14% adjusted EPS development in FY2021, 3M boosted its dividend by lower than 1% final yr. The corporate is now guiding its FY2022 adjusted EPS development to just one – 2% after reducing the steering from earlier within the yr.
The corporate’s points stem from continued inflation and provide chain issues, together with results from the warfare in Ukraine and the impacts of COVID in China. In response to the slowed development, 3M offered off its meals security enterprise and is working to segregate its well being care enterprise to focus the 3M on its legacy companies.
Whether or not 3M’s strikes to extend its development work is dependent upon the standard of their administration, however it should take time to indicate up on the corporate’s steadiness sheet. 3M will proceed its dividend development streak, however buyers will seemingly see one other minimal increase.
Prediction: 0.7 – 1.3% enhance to $6.00 – $6.04
Predicted Ahead Yield: 5.21 – 5.24%
PepsiCo, Inc. (PEP) – 50 years
Tender drink and snack firm PepsiCo has a really constant dividend development document, with annual will increase within the 6 – 8% vary. Conveniently, the corporate is guiding adjusted EPS development for 2022 to 7.5%. The corporate’s development is being led by income development of at the least 14% in its Latin America, Frito-Lay North America, and Quaker Meals North America enterprise segments within the first 3 quarters of 2022. Curiously, these income beneficial properties usually are not joined by quantity development, implying that PepsiCo is ready to move alongside value will increase to the patron.
For the complete yr, the corporate not too long ago raised its steering for natural income development to 12% and fixed forex EPS development of 10%. The latter is diminished by 2.5 proportion factors attributable to forex results, giving the 7.5% EPS development talked about earlier.
PepsiCo’s capability to proceed to develop its revenues and earnings in an inflationary atmosphere is spectacular and helps one other dividend increase within the 7% vary.
Prediction: 6.5 – 7.8% enhance to $4.90 – $4.96
Predicted Ahead Yield: 2.89 – 2.92%
And listed here are my predictions for the 19 different corporations which ought to announce annual will increase within the first half of February:
Firm # Yrs Trade Prediction (%) New Annual Fee Analog Units (ADI) 20 Semiconductors 9.9 – 11.8% $3.34 – $3.40 Semiconductor firm Analog Units is displaying good development in its industrial, automotive and communications markets, driving adjusted EPS development of practically 50%. The corporate has constructed a constant dividend development document; buyers can stay up for one other 10% increase. Ahead Yield: 1.96% – 1.99% Allegion plc (ALLE) 9 Safety & Safety Providers 3.7 – 6.1% $1.70 – $1.74 The safety firm has persistently boosted its dividend by double-digits, however this yr stands out as the exception. Adjusted EPS grew by lower than 2% in 2021 and Allegion is guiding to adjusted EPS development of 5% in 2022, regardless of anticipating income development of 10%. The one cause that the corporate would proceed its 10%+ will increase is the present payout ratio of 30%, assuming the earnings steering is correct. I anticipate the corporate to tug again on its dividend enhance into the mid-single digits. Ahead Yield: 1.49% – 1.52% Avista Company (AVA) 20 Utilities – Diversified 2.3 – 4.0% $1.80 – $1.83 The power producer and distributor serving the Northwestern United States lowered its EPS steering by 2.5% for 2022 and by 6% for 2023. Buyers can anticipate Avista’s dividend enhance to come back in under its 4% common development charge. Ahead Yield: 4.50% – 4.58% Cisco Techniques (CSCO) 12 Communications Gear 2.6 – 3.9% $1.56 – $1.58 Networking {hardware} designer and producer Cisco Techniques noticed adjusted EPS develop by 4% in FY22 and is one other 5 – 6% development in FY23. The corporate has centered on shopping for again shares, retiring practically 14% of excellent shares since 2017. Since Cisco is modest EPS development, I anticipate one other yr of sluggish dividend development following final yr’s 3% increase. Ahead Yield: 3.22% – 3.26% Quest Diagnostics Inc. (DGX) 12 Diagnostics & Analysis 6.1 – 7.6% $2.80 – $2.84 With revenues from COVID-19 testing down greater than 50%, Quest Diagnostics is guiding to a 30% drop in EPS. Even with the drop, the corporate has a payout ratio of 25%, leaving room for one more increase within the 6 – 7% vary. Ahead Yield: 1.92% – 1.95% Eversource Power (ES) 24 Utilities – Regulated Electrical 5.9 – 7.1% $2.70 – $2.73 Utility Eversource not too long ago reaffirmed its long-term development goal of 5 – 7%, which is per its dividend development charge during the last decade. The corporate is projecting a 15% EPS in 2022, which greater than makes up for flat EPS in 2021. Buyers will get pleasure from one other 6 – 7% dividend increase this yr. Ahead Yield: 3.34% – 3.37% Exponent, Inc. (EXPO) 10 Consulting Providers 12.5 – 18.8% $1.08 – $1.14 The engineering and scientific consulting agency is flat to barely decrease EPS in 2022. Exponent has constructed a outstanding dividend development charge of 18% during the last 5 years, capped off with a 20% increase final yr. In some unspecified time in the future, dividend development will sluggish dramatically however I don’t suppose it’ll be this yr. Ahead Yield: 1.07% – 1.13% Corning Included (GLW) 12 Digital Parts 5.6 – 9.3% $1.14 – $1.18 Demand for glass panels fell in 2022, driving Corning’s core EPS steering down 20% to between $1.62 and $1.68. Given the warning the corporate is displaying by ready for enterprise to rebound, I anticipate the corporate’s dividend increase to be within the mid-to-high single digits – about half of Corning’s long-term development charge. Ahead Yield: 3.10% – 3.21% ITT Inc. (ITT) 10 Specialty Industrial Equipment 13.6 – 17.4% $1.20 – $1.24 The specialty industrial equipment firm has persistently boosted its dividend by 10%+ yearly. The corporate has little debt, a payout ratio under 30%, and is anticipating to announce FY22 adjusted EPS development of practically 9%. Buyers received’t see one other 20% increase like final yr however can nonetheless anticipate a rise within the mid-teens. Ahead Yield: 1.31% – 1.36% Jack Henry & Associates, Inc. (JKHY) 32 Data Know-how Providers 5.1 – 7.1% $2.06 – $2.10 Jack Henry supplies know-how options to monetary corporations. After rising EPS by 20% in FY22 (which ended June 30, 2022), the corporate has lowered its steering for FY23 and is at present anticipating zero EPS development year-over-year. Watch for one more increase within the mid-single digits, like final yr’s. Ahead Yield: 1.14% – 1.16% Moody’s Company (MCO) 13 Monetary Information & Inventory Exchanges 7.9 – 10.7% $3.02 – $3.10 Moody’s enterprise is split into two segments: Moody’s Buyers Service and Moody’s Analytics. Moody’s Buyers Service revenues and earnings are struggling within the present fiscal yr attributable to decrease debt issuance globally because the markets turned unstable and rates of interest rise worldwide. That is driving expectations of adjusted EPS down by 21 – 25%. Whereas Moody’s has a superb dividend development charge of round 18%, the corporate can be arduous pressed to satisfy that bar. Ahead Yield: 0.94% – 0.97% NextEra Power, Inc. (NEE) 28 Utilities – Regulated Electrical 9.4 – 11.8% $1.86 – $1.90 The Florida-based utility not too long ago prolonged its anticipated EPS development charge of 6 – 8% by 2025 and famous that it expects to develop dividends at roughly 10% by at the least 2024. The corporate’s anticipating 12% development in adjusted EPS in 2022, which greater than helps NextEra’s objectives. Ahead Yield: 2.46% – 2.51% NorthWestern Company (NWE) 18 Utilities – Diversified 0.8 – 1.6% $2.54 – $2.56 Between diminished industrial demand and better rates of interest, the Montana and South Dakota-based utility noticed EPS fall 20%. It’ll be one more yr of minimal dividend development for NorthWestern. Ahead Yield: 4.48% – 4.51% Public Service Enterprise Group Included (PEG) 11 Utilities – Diversified 2.8 – 4.6% $2.22 – $2.26 Utility PSEG serves northern New Jersey and Lengthy Island. Like NorthWestern above, PSEG is guiding 2022 EPS downward year-over-year. In contrast to NorthWestern, the EPS drop is considerably smaller – 5.5%. PSEG buyers will see one other dividend increase, smaller than final yr’s 6% enhance and certain across the firm’s 4% long-term development charge. Ahead Yield: 3.66% – 3.73% Prudential Monetary, Inc. (PRU) 14 Insurance coverage – Life 4.2 – 5.8% $5.00 – $5.08 With the market down within the first half of the yr, the insurer took successful on earnings attributable to decrease funding beneficial properties and funding administration charges. Count on one other enhance like final yr’s 4% increase. Ahead Yield: 4.83% – 4.91% The Sherwin-Williams Firm (SHW) 44 Specialty Chemical compounds 5.0 – 8.3% 2.52 – $2.60 With a heavy debt load and an inflationary atmosphere, the paint and coatings firm has a number of headwinds to maintain its 16% compounded dividend development charge going. However with expectations of 6% EPS development after flat earnings in 2021, buyers can anticipate a forty fifth yr of dividend development from Sherwin-Williams. Ahead Yield: 1.10% – 1.14% T. Rowe Value Group (TROW) 36 Asset Administration 5.0 – 6.3% $5.04 – $5.10 The bear market drove property below administration dramatically down for the funding supervisor, leading to a 35% drop in adjusted EPS. The corporate received’t be capable of match final yr’s 11% dividend enhance however will seemingly reward buyers with a mid-single digit dividend increase. Ahead Yield: 4.33% – 4.39% United Parcel Service, Inc. (UPS) 13 Built-in Freight & Logistics 7.9 – 9.2% $6.56 – $6.64 The cargo firm is monitoring to develop EPS by 6 – 7% over final yr’s numbers. With a payout ratio round 50%, there’s room for one more yr of dividend development however buyers received’t see something near final yr’s shock 49% increase. Ahead Yield: 3.60% – 3.65% Xylem Inc. (XYL) 11 Specialty Industrial Equipment 6.7 – 10.0% $1.28 – $1.32 Dividend development from the water know-how improvement firm has slowed, with 8-cent annual boosts in every of the final 3 years. With adjusted EPS development of 21% in 2021 adopted by an expectation of 8% in 2022, we’d see a break from this sample. I feel there’s a risk of a barely bigger increase this yr. Ahead Yield: 1.25% – 1.29% Click on to enlarge
Abstract
January introduced some very good dividend will increase, together with some disappointing boosts from corporations which can be coping with sluggish earnings development. Within the latter class are client merchandise firm Kimberly-Clark and utility Consolidated Edison, with will increase under 3%. Additionally coming in with a disappointing increase was funding supervisor BlackRock – a results of the fallout from a weak inventory market in 2022.
On the opposite facet, buyers had been rewarded with 10%+ will increase from Archer-Daniels-Midland, Fastenal, and Franklin Electrical. Regional financial institution Enterprise Bancorp additionally rewarded buyers with a 12% enhance.
Whereas this was a great begin to the yr, there is a bow wave of dividend will increase coming in February. A number of dividend kings – these corporations with at the least 50 years of dividend development – will announce their newest will increase. Real Components, with 66 years of dividend development below its belt, ought to announce a lift round 10%. Trailing proper behind them, with 64 years of development is 3M, which ought to announce a small enhance – sufficient to maintain the streak alive. PepsiCo will start its second half century of dividend development with a mid-single digit increase.
Different notable will increase within the first two weeks of February embody consulting firm Exponent, chip producer Analog Units, and industrial producer ITT, all of which ought to reward buyers with 10%+ boosts.