adminHP should announce its annual dividend increase in early November, extending its dividend growth streak to 15 years.
This is the latest in my series of articles where I provide predictions of annual dividend increases for long-term dividend growth companies. At the end of September, I provided predictions for 15 dividend growth companies that have historically announced annual payout increases in October. In this article I’ll look at another 13 dividend growth companies that I expect will announce their annual dividend increases in the first half of November.
Before I get to that, I want to note two other companies with a history of dividend growth that also announced annual dividend increases in October:
– Credit card processor Visa (V) announced its 16th year of dividend growth, boosting its annual dividend by 15.6% to $2.08. The company has a forward yield of 0.91%.
– Exxon Mobil (XOM) boosted its dividend by 4.4% to an annualized $3.80 with its 42nd year of dividend growth and giving the energy giant a forward yield of 3.60%.
Here are the results from my predictions from October (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 first half of November:
(All yields are based on stock prices at the market close on Friday, October 27th.)
Results for Dividend Increase Announcements from October
AbbVie Inc. (ABBV) – 12 years of dividend growth
Prediction: 4.7 – 6.1% increase to $6.20 – $6.28
Actual: 4.7% increase to $6.20
Forward yield: 4.46%
Dividend growth continues to decline as AbbVie gets further away from its spinoff from Abbott Labs in 2013.
American Electric Power Company, Inc. (AEP) – 15 years
Prediction: 3.6 – 5.4% increase to $3.44 – $3.50
Actual: 6.0% increase to $3.52
Forward yield: 4.70%
The electric utility continues its history of 5 – 6% annual dividend growth.
A. O. Smith Corporation (AOS) – 31 years of dividend growth
Prediction: 10.0 – 13.3% increase to $1.32 – $1.36
Actual: 6.7% increase to $3.52
Forward yield: 1.89%
Despite expectations of double-digit EPS growth, the boiler and hot water heater manufacturer announced a dividend increase of 7% for the 2nd straight year. This is roughly half of the company’s long-term dividend growth.
Amphenol Corporation (APH) – 13 years
Prediction: 4.8 – 9.5% increase to $0.88 – $0.92
Actual: 4.8% increase to $0.88
Forward yield: 1.11%
As expected, the economic slowdown is taking its toll on the electrical component manufacturer’s dividend growth rate.
Black Hills Corporation (BKH) – 53 years
Prediction: 4.0 – 5.6% increase to $2.60 – $2.64
Actual: 0% increase to $2.50
Forward yield: 5.18%
With EPS falling this year, the natural gas and electric utility is deferring its payout boost. Black Hills has until the end of 2024 to keep its dividend growth streak going.
Brown & Brown, Inc. (BRO) – 30 years
Prediction: 8.7 – 13.0% increase to $0.50 – $0.52
Actual: 13.0% increase to $0.52
Forward yield: 0.77%
This is insurer Brown & Brown’s 2nd straight year of double-digit growth.
The Gorman-Rupp Company (GRC) – 18 years
Prediction: 2.9 – 5.7% increase to $0.72 – $0.74
Actual: 2.9% increase to $0.72
Forward yield: 2.33%
Dividend growth continues to be anemic at the pump manufacturer as it digests the additional debt taken on from the acquisition of Fill-Rite.
Lincoln Electric Holdings, Inc. (LECO) – 29 years
Prediction: 13.3 – 17.2% increase to $2.90 – $3.00
Actual: 10.9% increase to $2.84
Forward yield: 1.64%
While not meeting my expectations, Lincoln Electric still continued its pattern of double-digit dividend growth.
Lockheed Martin Corporation (LMT) – 23 years
Prediction: 5.0 – 6.7% increase to $12.60 – $12.80
Actual: 5.0% increase to $12.60
Forward yield: 2.84%
Dividend growth slowed from 7% last year at the mega-defense contractor.
McDonald’s Corporation (MCD) – 49 years
Prediction: 9.9 – 11.2% increase to $6.68 – $6.76
Actual: 9.9% increase to $6.68
Forward yield: 2.61%
It’s a second consecutive year of 10% dividend growth from McDonald’s as the company appears to have made a successful transformation after the pandemic.
Middlesex Water Company (MSEX) – 21 years
Prediction: 7.2 – 8.8% increase to $1.34 – $1.36
Actual: 4.0% increase to $1.30
Forward yield: 2.05%
Despite 15% EPS growth in 2022, this year’s flat EPS so far caused the utility to slow its dividend growth.
Northwest Natural Holding Company (NWN) – 68 years
Prediction: 0.5 – 1.0% increase to $1.95 – $1.96
Actual: 0.5% increase to $1.95
Forward yield: 5.26%
This is the 9th year of annual dividend growth of a penny per share.
Prosperity Bancshares, Inc. (PB) – 26 years
Prediction: 3.6 – 5.5% increase to $2.28 – $2.32
Actual: 1.8% increase to $2.24
Forward yield: 4.16%
Dividend growth continues to slow dramatically at the regional bank.
Rockwell Automation, Inc. (ROK) – 15 years
Prediction: 4.2 – 5.1% increase to $4.92 – $4.96
Actual: 5.9% increase to $5.00
Forward yield: 1.91%
This is the 2nd year of 5 – 6% dividend growth from the automation company.
RPM International Inc. (RPM) – 50 years
Prediction: 4.8 – 7.1% increase to $1.76 – $1.80
Actual: 9.5% increase to $1.84
Forward yield: 2.06%
After a 5% dividend boost last year, the specialty chemical company returned to its traditional growth rate.
Stepan Company (SCL) – 56 years
Prediction: 2.7 – 5.5% increase to $1.50 – $1.54
Actual: 2.7% increase to $1.50
Forward yield: 2.01%
With sales and income down, dividend growth is slowing at the specialty chemical company.
Standex International Corporation (SXI) – 14 years
Prediction: 8.9 – 14.3% increase to $1.22 – $1.28
Actual: 7.1% increase to $1.20
Forward yield: 0.85%
The diversified manufacturer announced a second year of dividend growth in the 7% range.
Tompkins Financial Corporation (TMP) – 37 years
Prediction: 3.3 – 5.0% increase to $2.48 – $2.52
Actual: 0% increase to $2.40
Forward yield: 4.87%
This regional bank is dealing with the same issues that many other banks are – a combination of an economic slowdown and unrealized losses on loans issued when interest rates were much lower. Like Black Hills above, Tompkins Financial has until the end of 2024 to keep its dividend growth streak going.
Waste Connections, Inc. (WCN) – 14 years
Prediction: 11.8 – 17.6% increase to $1.14 – $1.20
Actual: 11.8% increase to $1.14
Forward yield: 0.89%
It’s another year of 10%+ dividend growth from the Canadian solid waste services company.
Predictions for Dividend Increases for the First Half of November
There are 13 long-term dividend growth companies I expect to announce their annual increases in October. First, here are my predictions for two featured companies:
Becton, Dickinson and Company (BDX) – 51 years of dividend growth
Becton, Dickinson has three primary business segments: BD Medical, BD Life Sciences and BD Interventional. BD Medical develops products to deliver and manage medications, such as intravenous medication systems, pre-fillable syringes, and automated medication delivery systems. BD Life Sciences develops instruments to detect infectious diseases and cancers – for example, it was BD Life Sciences that developed and marketed the company’s At Home COVID-19 test. Finally, BD Interventional provides specialty products for vascular, oncology and surgical applications. BD Medical is the largest of the three segments, with annual revenues of roughly $5B.
BD is one of the “Dividend Kings” – companies that have increased their dividend year over year for at least half a century. The company sports a modest dividend growth record, with an average compounded growth rate of 4% over the last 5 years. The number of outstanding shares has fluctuated a bit but the company doesn’t appear to be actively repurchasing shares, so the share count has remained relatively stable over the last 5 years.
BD’s dividend boost last year was 4.6% when the company posted EPS growth of less than 1% for the fiscal year that ended September 30, 2022. The company has provided guidance for fiscal 2023 EPS growth of between 6% and 8%. Given this, I expect BD to announce a payout boost consistent with its dividend growth history – somewhere in the mid-single digits and a little higher than last year.
Prediction: 4.9 – 6.6% increase to $3.82 – $3.88
Predicted Forward Yield: 1.52 – 1.54%
HP Inc. (HPQ) – 14 years
The technology company has three business segments: Personal Systems, Printing, and Corporate Investments. The Personal Systems segment offers commercial and consumer desktops and laptops, along with monitors and software. The Printing segment offers office and personal printers and supplies, including 3D printers. Finally, Corporate Investments covers the company’s business investment projects and research and development.
Net revenue and income have fallen in both the Personal Systems and Printing segments in the first three quarters of fiscal 2023. The company is struggling with the economic slowdown as consumers and businesses cut back on discretionary spending and investment. Worse yet, HP’s free cash flow, from which dividends are paid, has fallen over the last two years, from $4.2B in 2021 to an expected $3.0B in 2023 – a drop of nearly 30% over two years.
Despite a 5-year compounded dividend growth rate of 13%, the drop in free cash flow hit last year’s dividend growth – the 5% dividend increase was the smallest boost from HP in a long time. As free cash flow continues to fall, so will the company’s dividend growth. Investors can expect a low-to-mid single-digit boost this year.
Prediction: 2.9 – 4.8% increase to $1.08 – $1.10
Predicted Forward Yield: 4.18 – 4.26%
Here are my predictions for the 11 other companies that should announce annual increases in the first half of November:
| Company | # Yrs | Industry | Prediction (%) | New Annual Rate |
| Automatic Data Processing (ADP) | 48 | Staffing & Employment Services | 13.0 – 16.0% | $5.65 – $5.80 |
| The business services company continues to put up outstanding numbers year after year. After posting 17% adjusted EPS growth in the year ended June 30th, ADP is guiding to another 10 to 12% growth in fiscal 2024. The double-digit EPS growth allows the company to boost its payout in the low teens on a routine basis and occasionally, like last year, as much as 20%. With this year’s EPS growth, investors can expect a dividend increase in the mid-teens. Predicted Forward Yield: 2.63 – 2.70% | ||||
| Assurant, Inc. (AIZ) | 19 | Insurance – Specialty | 4.3 – 7.1% | $2.92 – $3.00 |
| Assurant provides specialty insurance products to consumers, including warranties for high-end products. The company’s dividend growth has slowed over time, dropping to 3% last year. Assurant’s adjusted EPS growth reached 9% last year and the company is expecting continued growth in the high single-digit range, so there should be plenty of free cash flow for continued dividend growth. But the company has focused on buying back shares – repurchasing nearly 15% of all outstanding shares since 2018 – so investors can expect a mid-single-digit increase while Assurant continues to buy back its shares. Predicted Forward Yield: 2.00 – 2.05% | ||||
| Atmos Energy Corporation (ATO) | 39 | Utilities – Regulated Gas | 6.8 – 8.1% | $3.16 – $3.20 |
| Natural gas distribution company Atmos has a consistent dividend growth rate in the 8 – 9% range. With EPS growth of 9% last year and another 8% expected this year, investors can look forward to another good increase. One thing to be aware of is the growing number of outstanding shares but, for now, the dividend growth streak should continue at the same rate. Predicted Forward Yield: 2.98 – 3.02% | ||||
| Cencora (COR) | 19 | Medical Distribution | 4.1 – 7.2% | $2.02 – $2.08 |
| Formerly AmerisourceBergen, healthcare company Cencora carries its dividend growth record forward. Dividend growth has slowed quite a bit, falling to around 5% over the last 5 years from 10%+ before that. EPS growth in 2022 returned after Cencora purchased Alliance Healthcare from Walgreens. Alliance is one of Europe’s largest drug wholesalers and the additional business drove EPS growth to nearly 20%, with expectations of another 8% growth this year. However, the company has a boatload of debt so it looks like dividend growth will be suppressed for a while as the company works through the burden. Predicted Forward Yield: 1.08 – 1.11% | ||||
| Emerson Electric Company (EMR) | 66 | Specialty Industrial Machinery | 1.0% – 1.9% | $2.10 – $2.12 |
| Emerson is notable for having one of the longest dividend growth histories among publicly traded companies, but not for how quickly the company grows its payout. Over the last 7 years, Emerson has boosted its annual dividend by between 2 and 4 cents each year. Despite expected sales growth of 10% this year, Emerson is looking at a 15% drop in adjusted EPS. This means investors get to look forward to another year of 2 – 4 cent annual dividend growth. | ||||
| Evergy, Inc. (EVRG) | 20 | Utilities – Regulated Electric | 3.7 – 5.3% | $2.54 – $2.58 |
| Electric utility Evergy’s dividend growth has accelerated over the last several years, boosting the company’s 5-year growth rate to over 8%. Last year’s 7% boost nearly matched its adjusted EPS growth rate of 7.2%. But with EPS in 2023 expected to fall by the low single-digit percentages, the utility will be hard-pressed to duplicate last year’s increase. Watch for a boost in the mid-single digits. Predicted Forward Yield: 5.26 – 5.34% | ||||
| Huntington Ingalls Industries, Inc. (HII) | 11 | Aerospace & Defense | 4.0 – 5.2% | $5.16 – $5.22 |
| While shipbuilder and defense contractor Huntington Ingalls stands to benefit from the refocus and any additional spending on national security, the company expects free cash flow to fall 14% in 2023 after jumping 10% in 2022. Given that last year’s dividend increase was only 5%, with reduced free cash flow investors won’t see anything larger this year. Predicted Forward Yield: 2.42 – 2.45% | ||||
| Lancaster Colony Corporation (LANC) | 61 | Packaged Foods | 5.9 – 8.2% | $3.60 – $3.68 |
| The owner of various food brands like Marzetti salad dressings and New York Bakery breads has more than 6 decades of dividend growth behind it. The company has been able to pass on increased costs to its customers, which boosted sales by more than 8% and EPS by nearly 25% in fiscal 2023. This will allow Lancaster Colony to extend its dividend growth streak to 62 years; investors can expect another year in the mid-to-high single digits. Predicted Forward Yield: 2.16 – 2.20% | ||||
| Nelnet, Inc. (NNI) | 9 | Credit Services | 5.8 – 7.7% | $1.10 – $1.12 |
| Nelnet manages and processes student loan and tuition payments across the country. With student loans continuing to expand, Nelnet’s EPS grew 6% in 2022. But the company’s focus has been on repurchasing its shares, having taken more than a third of all outstanding shares off the market since 2018. The company recently repurchased some of its outstanding debt, which reduced this year’s profits. However, Nelnet should be able to manage another dividend increase, likely slightly less than last year’s 8% increase. Predicted Forward Yield: 1.33 – 1.35% | ||||
| Roper Technologies, Inc. (ROP) | 30 | Software – Application | 13.6 – 15.8% | $3.10 – $3.16 |
| The diversified software developer has built an outstanding dividend growth history, regularly boosting its payout by more than 10% each year. Beyond dividend growth, Roper Technologies regularly deploys additional free cash flow to acquire other companies in niche markets. The company continues to grow earnings and Roper has already increased its guidance to 15% EPS growth for 2023 after 15% EPS growth last year. This should power another year of payout growth in the mid-teens. Predicted Forward Yield: 0.65 – 0.66% | ||||
| Snap-on Incorporated (SNA) | 14 | Tools & Accessories | 13.5 – 14.8% | $7.36 – $7.44 |
| With operating income up more than 10% in three of its four business segments, the tool maker’s EPS is growing at a 15% clip in the first half of 2023, after 13% growth in 2022. Investors can look forward to a payout boost in the mid-teens, consistent with the company’s 15% compounded dividend growth rate. Predicted Forward Yield: 2.92 – 2.95% | ||||
Summary
Most of the dividend increases were modest in October, with McDonald’s highlighting the month with its 10% boost. Other double-digit boosts came from insurer Brown & Brown, industrial equipment manufacturer Lincoln Electric, and Canadian waste services company Waste Connections.
Notably, two companies that usually announce increases in October completely skipped it this year. Utility Black Hills, which is dealing with the ramifications of a spinoff, and regional bank Tompkins Financial. Like many banks, Tompkins is dealing with the impacts of the rapid jump in interest rates. Both these companies have until the end of 2024 to boost their payouts to keep their year-over-year dividend growth streaks going.
Looking ahead to the first half of November, investors in ADP, Roper Technologies, and Snap-on can look forward to 10%+ dividend boosts, while Emerson will extend its dividend growth streak to 67 years with a minimal increase. Most other dividend increases will be in the mid-single digits.
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