WEC - Mastercard Pfizer Among 18 Companies To Announce Dividend Increases In December
2023-11-27 10:44:10 ET
Summary
- The second half of November saw announcements of annual dividend increases from nine companies, including an 11% increase from Nike. Merck’s annual dividend boost will be deferred to December.
- Widely-held Broadcom and Mastercard will announce their annual dividend increases in December. I’m expecting 10%+ from both these companies.
- Sixteen other companies will announce annual increases before Christmas, including healthcare companies Stryker, Eli Lilly, and Bristol-Myers Squibb.
This is the latest in my series of articles where I provide predictions of annual dividend increases for long-term dividend growth companies. In the middle of November, I provided predictions for 13 dividend growth companies that have historically announced annual payout increases in the second half of November. In this article I’ll look at another 18 dividend growth companies that I expect will announce their annual dividend increases in December.
Here are the results from my predictions from the second 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 December:
(All yields are based on stock prices at the market close on Friday, November 24th.)
Results for Dividend Increase Announcements from the Second Half of November
Agilent Technologies, Inc. ( A ) – 13 years of dividend growth
Prediction: 11.1 – 13.3% increase to $1.00 - $1.02
Actual: 4.9% increase to $0.944
Forward yield: 0.75%
The healthcare diagnostics company's latest increase was smaller than I expected.
American Equity Investment Life ( AEL ) – 19 years
Prediction: 5.6 – 11.1% increase to $0.38 - $0.40
Actual: Suspended; company pending acquisition by Brookfield Asset Management
The insurer is being acquired by Brookfield Asset Management and appears to have suspended its dividend.
Brown-Forman Corporation (BF.B) – 40 years
Prediction: 4.0 – 7.0% increase to $0.857 - $0.882
Actual: 5.7% increase to $0.8712
Forward yield: 1.46%
The distilled spirits company finishes off its 4th decade of dividend growth with a mid-single digit boost.
CubeSmart ( CUBE ) – 14 years
Prediction: 13.3 – 16.3% increase to $2.22 - $2.28
Actual: Deferred to December
The REIT should announce its next increase in early December.
Hormel Foods Corporation ( HRL ) – 58 years
Prediction: 3.6 – 5.4% increase to $1.14 - $1.16
Actual: 2.7% increase to $1.13
Forward yield: 3.45%
Dividend growth has slowed at the food company.
Matthews International Corporation ( MATW ) – 29 years
Prediction: 2.2 – 4.3% increase to $0.94 - $0.96
Actual: 4.3% increase to $0.96
Forward yield: 2.80%
This is the 6th straight year of 2 - 4 cent annual increases for the branding and memorialization company.
McCormick & Company, Inc. ( MKC ) – 23 years
Prediction: 2.6 – 6.4% increase to $1.60 - $1.66
Actual: Deferred to December
The spices and flavoring company should announce its next boost in early December.
Merck & Co., Inc. ( MRK ) – 12 years of dividend growth
Prediction: 4.1 – 6.2% increase to $3.04 - $3.10
Actual: Deferred to December
As I write this, Merck hasn't announced its latest boost. Looking forward to an announcement in December.
Motorola Solutions, Inc. ( MSI ) – 13 years
Prediction: 11.4 – 13.6% increase to $3.92 - $4.00
Actual: 11.4% increase to $3.92
Forward yield: 1.22%
It's another year of double-digit growth from Motorola Solutions.
Nike, Inc. ( NKE ) – 23 years
Prediction: 10.3 – 13.2% increase to $1.50 - $1.54
Actual: 8.8% increase to $1.48
Forward yield: 1.37%
Nike's latest boost fell short of what I expected.
Royal Gold, Inc. ( RGLD ) – 23 years
Prediction: 2.7 – 5.3% increase to $1.54 - $1.58
Actual: 6.7% increase to $1.60
Forward yield: 1.37%
It's another year of 7% dividend growth for the precious metals company.
Spire Inc. ( SR ) – 21 years
Prediction: 4.2 – 5.6% increase to $3.00 - $3.04
Actual: 4.9% increase to $3.02
Forward yield: 4.87%
The natural gas company continues its pattern of 5% annual dividend growth.
The York Water Company ( YORW ) – 27 years
Prediction: 3.7 – 4.9% increase to $0.84 - $0.85
Actual: 4.1% increase to $0.8432
Forward yield: 2.25%
The water utility announced another year of 4% dividend growth.
Predictions for December’s Dividend Increases
There are 18 long-term dividend growth companies I expect to announce their annual increases in December. First, here are my predictions for three featured companies:
Broadcom Inc. ( AVGO ) – 14 years of dividend growth
Broadcom designs, develops and supplies semiconductor and software for a variety of applications. The company has significant intellectual property and number of patents used in, for example – data networks, home and industrial internet routers, telecommunication equipment, smartphones, and alternative energy systems.
Although the company has a 50-year history from multiple companies, Broadcom’s dividend growth history dates back to 2010. Initially, the company boosted its dividend every quarter but switched to annual increases in 2017. The quarterly dividend increases gives Broadcom an outstanding 28% compounded dividend growth record over the last decade. And even though that level of dividend growth is bound to slow down, it hasn’t affected Broadcom much; the company has an envious 5-year compounded growth rate of 25%.
Investors looking forward to Broadcom’s 2023 dividend increase should see more of the same and an acceleration from last year’s 12% boost. The company grew EPS by 34% and free cash flow by 22% in 2022. This continued into 2023 – over the first 3 quarters of the year, Broadcom grew EPS by 32% and free cash flow by another 9%. With this type of performance, investors won’t see a return to 20% dividend growth but can look for a boost in the mid-teens.
Prediction: 14.7 – 17.4% increase to $21.10 - $21.60
Predicted Forward Yield: 2.16 – 2.21%
Mastercard Incorporated ( MA ) – 12 years
As long as the worldwide digital economy expands, Mastercard will benefit from it. With credit and debit card brands known worldwide, including Maestro and Cirrus and, of course, Mastercard and being involved with ACH payments, the company is poised to continue growing earnings as long as digital money flows keep growing. The company also provides cyber and intelligence solutions to keep digital money movement secure.
The company has an excellent, if short, dividend growth record. With 12 years of dividend growth under its belt, the company has a decade-long compounded growth rate over 30%. That level of dividend growth is unsustainable for nearly any business and over the last 5 years the compounded dividend growth rate has slowed to a still-outstanding 17%. The company has routinely boosted its dividend by 10%+, and that’s likely to continue. Adjusted EPS grew by 27% in 2022 and is up another 14% in the first 3 quarters of 2023. This level of EPS growth was powered by dollar volume growth of 12 – 13% and international money flows of at least 25% over the same time.
With all that said, I think that investors can look to another year of double-digit dividend growth, and it looks like Mastercard can keep that 17% compounded dividend growth rate going with another 16%-ish dividend boost this year.
Prediction: 14.0 – 17.5% increase to $2.60 - $2.68
Predicted Forward Yield: 0.63 – 0.65%
Pfizer Inc. ( PFE ) – 13 years
The biopharmaceutical company has three business divisions: Primary Care, Specialty Care, and Oncology. Primary Care includes Pfizer’s former Internal Medicine and Vaccines portfolios, including drugs for Covid-19 prevention and treatment. Secondary Care includes Pfizer’s former Inflammation and Immunology, Rare Disease, and Hospital portfolios. Finally, the company’s Oncology division includes the biologics, small molecules and immunotherapies used for treating a variety of cancers.
Pfizer’s growth in 2022 was driven by multiple drugs, specifically by blood clot drug Eliquis, and vaccines Prevnar, Comirnaty, and Paxlovid, which powered 40% growth in the company’s Primary Care division and resulted in adjusted EPS growth of 62%. But this seems to be a one-time effect – revenues and adjusted EPS in the first 3 quarters of 2023 are down 42% and 68%, respectively. This drop from 2022 to 2023 is caused by a drop in revenues due to the lack of COVID vaccine sales and an increase in costs from the write down of the inventory of these unused vaccines. Because the hit in 2023 is more than offsetting the gains in 2022, I expect that Pfizer will stick to its 14-year tradition of 4 or 8 cent annual dividend increases.
Prediction: 2.4 – 4.9% increase to $1.68 - $1.72
Predicted Forward Yield: 5.51 – 5.64%
Here are my predictions for the 15 other long-term dividend growth companies which should announce their annual increases in December:
| Company |
| # Yrs |
| Industry |
| Prediction (%) |
| New Annual Rate |
| Abbott Labs ( ABT ) |
| 51 |
| Healthcare - Medical Devices |
| 4.9% - 6.9% |
| $2.14 - $2.18 |
| Abbott Labs has business lines in Nutrition, Diagnostics and Medical Devices, along with an international pharmaceuticals line. The big boost to earnings over the last few years has been Abbott’s COVID tests, but with the passing of the COVID pandemic, sales of these tests have fallen off a cliff. Excluding COVID tests, sales were up 12% in the first 9 months of 2023; including COVID tests however, sales were down 9%. This drop in sales is driving adjusted earnings down by 17%, to an expected $4.44/share from last year’s $5.34/share. This should slow dividend growth from last year’s 8.5%. Predicted Forward Yield: 2.08 – 2.12% |
| Amgen Inc. ( AMGN ) |
| 12 |
| Healthcare - Drug Manufacturers |
| 9.9% - 11.0% |
| $9.36 - $9.46 |
| This biologics company compounded its dividend by 11% over the last 5 years. Having posted adjusted EPS growth of 27% in 2022, Amgen is positioned well for an even larger boost this year. However, EPS growth is expected to slow to 4 – 5% this year which reduces the chances of a larger increase. Moreover, Amgen focuses on stock buybacks – the company has taken 15% of all its shares out of circulation over the last 5 years. I expect the company to announce another 10% increase, very similar to last year’s boost. Predicted Forward Yield: 3.53 – 3.56% |
| Balchem Corporation ( BCPC ) |
| 13 |
| Material - Specialty Chemicals |
| 7.0% - 9.9% |
| $0.76 - $0.78 |
| Specialty chemical company Balchem develops products to improve human and animal health, including vitamins, amino acids and choline, an essential element that is used to transport lipids. The company has consistently boosted its payout by at least 10%, compounding its dividend by 13% over the last decade. It looks like dividend growth is likely to slow this year, as higher interest rates are taking a bite into earnings. After growing 13% in 2022, adjusted EPS are down 1% in the first 9 months of 2023. Dividend growth will fall to single digits, but still close to 10%. Predicted Forward Yield: 0.62 – 0.63% |
| Franklin Resources ( BEN ) |
| 43 |
| Financial - Asset Management |
| 0% - 3.3% |
| $1.20 - $1.24 |
| With preliminary reports of EPS down 30% in 2023, dividend growth at investment advisor Franklin Resources will continue to slow, even from last year’s 3.4% boost. The drop in EPS means that the company’s payout ratio will jump to 70%, limiting available dividend growth and possibly convincing the company’s board to defer the next dividend increase to 2024. Predicted Forward Yield: 5.04 – 5.21% |
| Bristol-Myers Squibb Company ( BMY ) |
| 17 |
| Healthcare - Drug Manufacturers |
| 4.4% - 7.0% |
| $2.38 - $2.44 |
| Powered by double-digit growth in cancer drug Opdivo and anti-clotting drug Eliquis, Bristol-Myers saw adjusted EPS growth of 8% in 2022. Sales growth in both drugs is continuing in 2023, with additional good growth from cancer drug Yervoy. Unfortunately, this growth isn’t enough to offset drops in other drugs, resulting in flat to slightly lower EPS. The company is likely to announce a dividend boost in the mid-single digits, similar to last year’s 5.6% increase. Predicted Forward Yield: 4.78 – 4.90% |
| Ecolab Inc. ( ECL ) |
| 31 |
| Materials - Specialty Chemicals |
| 7.5% - 10.4% |
| $2.28 - $2.34 |
| Dividend growth from the water and hygiene company slowed to less than 4% last year, mostly due to a 3% drop in EPS. Things are looking up for Ecolab this year, as EPS are expected to be up nearly 30% in 2023 and the company is guiding to adjusted EPS growth in the mid-teens in 2024. Ecolab is likely to return to its long-term dividend growth rate of 9 – 10% this year. Predicted Forward Yield: 1.22 – 1.25% |
| Eastman Chemical Company ( EMN ) |
| 14 |
| Materials - Specialty Chemicals |
| 2.5% - 3.8% |
| $3.24 - $3.28 |
| Despite a decade-long compounded dividend growth rate of more than 10%, dividend growth has been slowing at Eastman Chemical as the specialty materials company focuses on share buybacks. The company has retired 15% of its outstanding shares in the last 5 years while last year’s payout boost was less than 4%. With flat EPS growth over the last two years, investors won’t see increasing dividend growth. Predicted Forward Yield: 3.98 – 4.03% |
| Graco Inc. ( GGG ) |
| 26 |
| Industrials - Specialty Industrial Machinery |
| 10.6% - 12.8% |
| $1.04 - $1.06 |
| Graco manufactures systems for managing and dispensing fluids and coatings. The company has consistently grown its dividend at 11 – 12% annually, with last year’s 11.9% boost characteristic of the growth investors have seen over the last decade. Earnings are continuing to grow at Graco, with adjusted EPS up 8% for all of last year, followed up by another 17% increase in the first 9 months of 2023. Investors should expect the company to continue its historical dividend growth. Predicted Forward Yield: 1.27 – 1.32% |
| Eli Lilly and Company ( LLY ) |
| 10 |
| Healthcare - Drug Manufacturers |
| 8.0% - 10.6% |
| $4.88 - $5.00 |
| Drug manufacturer Eli Lilly has compounded its dividend by nearly 14% over the last 5 years. With adjusted EPS growth of 13% in 2022, the company is likely to continue the pattern. However, the company is looking at a drop of 3% in adjusted EPS for 2023, which should cause dividend growth to slow to the high single digit percentages this year. Predicted Forward Yield: 0.81 – 0.83% |
| Nucor Corporation ( NUE ) |
| 50 |
| Materials - Steel |
| 1.0% - 2.9% |
| $2.06 - $2.10 |
| The iron and steel company’s earnings have jumped since 2020, growing from a low of $2.36 a share to last year’s $28.79. But with sales volumes down and pricing soft, EPS are down 38% in the first nine months of 2023. Nucor will continue its pattern of minimal dividend increases – the sole exception being the 23% boost the company paid out in 2021 when EPS jumped 10-fold. Predicted Forward Yield: 1.31 – 1.34% |
| SEI Investments Company ( SEIC ) |
| 32 |
| Financial - Asset Management |
| 7.0% - 9.3% |
| $0.92 - $0.94 |
| When the stock market got hit in 2022, earnings fell 9% at the investment manager. While the stock market recovered in 2023, EPS continued to fall another 3% in the first 9 months of the year. SEIC has established a pattern of mid-to-high single digit increases and uses the extra cash flow to buy back shares, and has retired nearly 13% of outstanding shares in 2018. Despite the falling earnings, the company has enough headroom for another boost in the single digit percentages. Predicted Forward Yield: 1.58 – 1.62% |
| Stryker Corporation ( SYK ) |
| 30 |
| Healthcare - Medical Devices |
| 4.0% - 6.0% |
| $3.12 - $3.18 |
| Although EPS is expected to jump 10% in 2023 at the medical device company, Stryker’s 3% EPS growth in 2022 will cause dividend growth to continue to slow from last year’s 8% boost. Investors should expect an increase about half of the company’s long-term dividend growth rate of 11%. Predicted Forward Yield: 1.07 – 1.09% |
| The Hanover Insurance Company ( THG ) |
| 19 |
| Insurance - Property & Casualty |
| 3.7% - 6.2% |
| $3.36 - $3.44 |
| Between investment losses and claims due to Winter Storm Elliott, both net and operating earnings fell at the property insurer in 2022. Excess claims continued into 2023 with storms in the Midwestern U. S., further hitting earnings at Hanover. Investors can expect that dividend growth will slow to the mid-single digits until earnings turn around. Predicted Forward Yield: 2.76 – 2.82% |
| The Toro Company ( TTC ) |
| 20 |
| Industrials - Tools & Accessories |
| 8.8% - 13.2% |
| $1.48 - $1.54 |
| After initially expecting continued EPS growth in 2023, the manufacturer of outdoor maintenance equipment has gradually downgraded its adjusted EPS outlook for the year. So, despite 16% EPS growth in 2022, Toro company will likely continue to slow the growth in its dividend, probably to around 10%. Predicted Forward Yield: 1.75 – 1.82% |
| WEC Energy Group, Inc. ( WEC ) |
| 20 |
| Utilities - Electric |
| 5.1% - 7.7% |
| $3.28 - $3.36 |
| The Wisconsin-based utility delivered more natural gas to its customers in 2022, which drove earnings growth to 8%. Things are slowing a bit in 2023, with EPS down 4% in the first 3 quarters. At 70%, WEC’s payout ratio is getting a little high based on 2022 numbers, but the company might be able to squeeze out another year of 7%-ish dividend growth. Predicted Forward Yield: 4.04 – 4.13% |
Summary
For dividend increases, the second half of November was pretty quiet, Although I had expected 13 announcements, there were only 9. Of the remaining four, three should announce their increase in the next week or so and one – insurer American Equity Investment Life – is in the process of being acquired by Brookfield Asset Management and stopped paying dividends. Communications equipment company Motorola Solutions announced an 11% increase, but most of the other announcements were in the mid-single digit range. Among well-known companies, widely held Nike announced a 9% increase while Hormel Foods extended its dividend growth streak to 58 years with a 3% increase.
Looking forward to December, we’ll see up to another 18 companies extend their dividend growth record. We should see 10%+ boosts from Broadcom, Mastercard and Graco. Other good increases – in the high-single digit range – will likely come from drug companies Eli Lilly and Amgen, and chemical company Balchem Corporation. Most at risk of losing its status as a dividend growth company is investment company Franklin Resources, which has been seeing declining earnings.
And with that, I hope you all have a wonderful holiday season!
For further details see:
Mastercard, Pfizer Among 18 Companies To Announce Dividend Increases In December