SWX - Colgate To Declare 60th Year Of Dividend Growth 10 Companies Boost Annual Dividends

Summary

• The dividend increases continued to come fast and furious in February.
• Home Depot and Silgan both announced 10%+ increases as Genuine Parts and Walmart extended their dividend growth records.
• Things will slow down in March, but investors will see double-digit boosts from Dollar General, Linde, and Steel Dynamics, and a small boost from Colgate-Palmolive.

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. In mid-February, I provided predictions for 14 dividend growth companies that have historically announced annual payout increases in the second half of the month. In this article, I’ll look at another 10 dividend growth companies that I expect will announce their annual dividend increases in March.

Before I get to that, there was one other long-term dividend growth company that announced its annual increase in the second half of the month.

- Domino’s Pizza ( DPZ ) began its 2nd decade of dividend growth with a 10% boost to an annualized $4.84. The company now has a forward yield of 1.63%.

Here are the results from my predictions from the second half of February (as always, the original predictions are available here ), followed by my predictions for the dividend increases that I’m expecting to be announced in March:

(All yields are based on stock prices at the market close on Friday, February 24th.)

Results for Dividend Increase Announcements from the Second Half of February

Albemarle Corporation ( ALB ) – 29 years of dividend growth

Prediction: 7.6 – 13.9% increase to $1.70 - $1.80

Actual: 1.3% increase to $1.60

Forward yield: 0.64%

Despite a jump in EPS, the lithium and specialty chemical company announced a disappointing dividend boost.

Best Buy Co., Inc. ( BBY ) – 19 years

Prediction: 9.1 – 11.4% increase to $3.84 - $3.92

Actual: Deferred to March

The electronics retailer should announce its annual increase in early March.

Chubb Limited ( CB ) – 30 years

Prediction: 2.4 – 3.6% increase to $3.40 - $3.44

Actual: 3.6% increase to $3.44

Forward yield: 1.63%

The insurer continues to boost its annual dividend by 8 or 12 cents a year.

Essex Property Trust, Inc. ( ESS ) – 29 years

Prediction: 5.0 – 7.0% increase to $9.24 - $9.42

Actual: 5.0% increase to $9.24

Forward yield: 4.03%

This is the second year of 5% dividend growth for the apartment REIT.

Genuine Parts Company ( GPC ) – 67 years

Prediction: 8.9 – 11.7% increase to $3.90 - $4.00

Actual: 6.1% increase to $3.80

Forward yield: 2.13%

Auto parts company Genuine Parts maintains its compounded growth rate of 6%.

The Home Depot, Inc. ( HD ) – 14 years of dividend growth

Prediction: 9.5 – 12.6% increase to $8.32 - $8.56

Actual: 10.0% increase to $8.36

Forward yield: 2.82%

The home improvement retailer continues to boost its dividend by double-digit percentages.

Leggett & Platt, Incorporated ( LEG ) – 51 years

Prediction: 0 – 0.6% increase to $1.76 - $1.77

Actual: 0% increase to $1.76

Forward yield: 5.13%

It looks like the furniture and bedding company will announce its annual dividend increase in May.

McGrath RentCorp ( MGRC ) – 32 years

Prediction: 6.7 – 9.9% increase to $1.94 - $2.00

Actual: 2.2% increase to $1.86

Forward yield: 1.78%

Dividend growth at the business-to-business rental company continues to slow.

Old Republic International Corporation ( ORI ) – 42 years

Prediction: 4.3% increase to $0.96

Actual: 6.5% increase to $0.98

Forward yield: 3.71%

The insurer broke its pattern of 4-cent annual increases with a 6-cent boost.

Silgan Holdings Inc. ( SLGN ) – 19 years

Prediction: 12.5 – 15.6% increase to $0.72 - $0.74

Actual: 12.5% increase to $0.72

Forward yield: 1.35%

The maker of packaging for consumer products continues to compound its dividend by double-digits.

SpartanNash Company ( SPTN ) – 12 years

Prediction: 9.5 – 11.9% increase to $0.92 - $0.94

Actual: Deferred to March

The food distribution company should announce its annual increase at the end of February or the beginning of March.

Sempra Energy ( SRE ) – 19 years

Prediction: 3.9 – 5.7% increase to $4.76 - $4.84

Actual: Deferred to March

Sempra Energy should announce earnings and its annual dividend increase before the market opens on February 28th.

Southwest Gas Holdings, Inc. ( SWX ) – 17 years

Prediction: 2.4 – 4.0% increase to $2.54 - $2.58

Actual: 0% increase to $2.48

Forward yield: 3.87%

Inflationary pressures are putting pressure on earnings at the utility. The company will likely announce a dividend later in the year to keep the dividend growth streak alive.

Telephone and Data Systems, Inc. ( TDS ) – 49 years

Prediction: 0 – 2.8% increase to $0.72 - $0.74

Actual: 2.8% increase to $0.74

Forward yield: 6.02%

Earnings continue to drop at the telecom, but the company keeps its dividend growth streak going.

Walmart Inc. ( WMT ) – 50 years

Prediction: 1.8 – 2.7% increase to $2.28 - $2.30

Actual: 1.8% increase to $2.28

Forward yield: 1.60%

The mega-retailer continues to announce small 4-cent annual increases.

Predictions for Dividend Increases for March

There are 10 companies I expect to announce their annual dividend increases in March. First, here are my predictions for two featured companies:

Colgate-Palmolive ( CL ) – 59 years of dividend growth

With many well-known brands, Colgate-Palmolive is in the top 200 of the largest publicly traded companies. The company’s dividend growth rate reflects that, with a modest decade-long compounded growth rate of 4.3%. The consumer products company has several headwinds that it’s dealing with including a strong dollar, which reduces earnings from overseas, and a heavy debt load, as the company now has nearly $8.9 billion in debt, up 21% in a single year. Despite its size, Colgate-Palmolive’s sales grew 5% in 2022 and is guiding to sales growth of 2 – 5% and adjusted EPS growth in the low-to-mid single digits in 2023.

But the guidance applies to the future and we’re focused on this year’s dividend increase. Adjusted EPS in 2022 fell 7% due to, in large part, the strong dollar and the COVID-19 pandemic in China, despite continued sales growth. With the company completing its 6th decade of dividend growth, investors will see a boost from the company. It will likely be smaller than last year’s 4.4% boost and closer to the 5-year compounded growth rate of 3%.

Prediction: 2.1 – 4.3% increase to $1.92 - $1.96

Predicted Forward Yield: 2.63 – 2.68%

Dollar General ( DG ) – 8 years

Discount retailer Dollar General has been growing rapidly – the chain just opened up its 19,000th store, but sales and earnings in the 4th quarter of 2022 fell short of expectations. This was due to several factors, most importantly Winter Storm Elliott which hit the upper Midwestern United States from December 21st – 26th and caused a drop in sales and increased damage to Dollar General’s existing inventory. And while same store sales grew in 2022 by 4.3%, this was also below expectations and guidance.

Looking forward to 2024, Dollar General is expecting same store sales growth of between 3 and 3.5% and EPS growth of between 4 and 6%, along with a higher interest expense.

Dollar General has been a cash flow machine for investors. With respect to dividends, the company has compounded its payout by more than 27% over the last 5 years, culminating in a 31% dividend increase last year. The company also used its free cash flow to buy back more than 14% of its outstanding shares over the last 5 years.

The company’s low payout ratio (around 20%) and continued growth means that investors can look forward to another good dividend increase. I expect that Dollar General will pull back on its dividend growth – current earnings growth doesn’t support another 31% boost – but the company will be reluctant to pull back too far, and will probably announce a dividend increase in the low teens.

Prediction: 11.8 – 14.5% increase to $2.46 - $2.52

Predicted Forward Yield: 1.15 – 1.18%

Here are my predictions for 8 other companies which should announce annual increases in March:

Summary

We continued to see many dividend increases in February as another 14 companies announced their annual increases in the second half of the month. Among the highlights was a 10% increase from Home Depot and a 12.5% increase from Silgan Holdings. And while we didn’t get a large increase from Walmart, the mega-retailer did complete a half century of different growth.

After a busy February, things will slow down in March. Double-digit increases are expected from Linde, Dollar General, and Steel Dynamics, with the latter expected to follow last year’s 31% boost with another 20%+ increase. Finally, consumer products company Colgate-Palmolive should announce a small increase to complete 60 years of dividend growth.

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