WLK - Microsoft McDonald's Among 12 Companies Scheduled To Announce Annual Dividend Boosts In September
Summary
- It was a good month for dividend growth investors, with double-digit boosts from multiple companies.
- Dover extended its dividend growth streak to 67 years - one of the longest among publicly traded companies - with a 1% increase.
- Another 12 companies will announce increases in September, including McDonald’s, Microsoft, and Lockheed Martin.
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 July, I provided predictions for 15 dividend growth companies that have historically announced annual payout increases during August. In this article I'll look at another 12 dividend growth companies that I expect will announce their annual dividend increases in September.
Here are the results from my predictions from August (as always, the original predictions are available here ), followed by my predictions for the dividend increases that I'm expecting to be announced in September:
(All yields are based on stock prices at the market close on Friday, September 2nd.)
Results for Dividend Increase Announcements from August
American Financial Group, Inc. ( AFG ) - 17 years of dividend growth
Prediction: 11.6 - 13.4% increase to $2.50 - $2.54
Actual: 12.5% increase to $2.52
Forward yield: 1.98%
The insurer continued its pattern of 12% annual increases.
BancFirst Corporation ( BANF ) - 28 years
Prediction: 2.8 - 5.6% increase to $1.48 - $1.52
Actual: Deferred to September
Regional bank BancFirst should announce its next annual dividend increase in the first week of September.
Badger Meter, Inc. ( BMI ) - 30 years
Prediction: 5.0 - 10.0% increase to $0.84 - $0.88
Actual: 12.5% increase to $0.90
Forward yield: 0.96%
With zero debt, Badger Meter was able to announce an increase above its 10-year average of 10%.
Broadridge Financial Solutions, Inc. ( BR ) - 16 years
Prediction: 9.4 - 12.5% increase to $2.80 - $2.88
Actual: 13.3% increase to $2.90
Forward yield: 1.74%
Financial technology company Broadridge announced an increase closer to its average growth rate of 14% than I expected.
CBOE Global Markets, Inc. ( CBOE ) - 13 years
Prediction: 10.4 - 14.6% increase to $2.12 - $2.20
Actual: 4.2% increase to $2.00
Forward yield: 1.67%
Financial markets company CBOE broke its streak of double-digit increases this year.
Carlisle Companies Incorporated ( CSL ) - 46 years
Prediction: 4.6 - 7.4% increase to $2.26 - $2.32
Actual: 38.9% increase to $3.00
Forward yield: 1.01%
The diversified niche manufacturer more than made up for last year's 3% dividend boost with this year's increase.
Dover Corporation ( DOV ) - 67 years
Prediction: 3.0 - 6.0% increase to $2.06 - $2.12
Actual: 1.0% increase to $2.02
Forward yield: 1.58%
This is now the 5th year of 2-4 cent annual dividend growth for Dover, but it keeps the dividend growth streak - one of the longest ones for a publicly traded company - alive.
Federal Realty Investment Trust ( FRT ) - 55 years
Prediction: 2.8 - 4.7% increase to $4.40 - $4.48
Actual: 0.9% increase to $4.32
Forward yield: 4.29%
The REIT keeps its dividend growth streak going with its 3rd straight year of 4-cent annual growth.
International Flavors & Fragrances Inc. ( IFF ) - 20 years
Prediction: 3.8 - 6.3% increase to $3.28 - $3.36
Actual: 2.5% increase to $3.24
Forward yield: 3.00%
Dividend growth is slowing at the specialty chemical company, as IFF is expecting earnings to be pressured by continued inflationary and supply chain issues.
Intuit Inc. ( INTU ) - 11 years
Prediction: 14.7 - 17.6% increase to $3.12 - $3.20
Actual: 14.7% increase to $3.12
Forward yield: 0.74%
The financial software company's latest dividend increase is nearly identical to its 5-year dividend growth rate.
Illinois Tool Works Inc. ( ITW ) - 48 years
Prediction: 12.3 - 13.9% increase to $5.48 - $5.56
Actual: 7.4% increase to $5.24
Forward yield: 2.68%
This is the 2nd straight year of 7% dividend growth for this diversified industrial manufacturer.
MGE Energy, Inc. ( MGEE ) - 47 years
Prediction: 3.9 - 5.2% increase to $1.61 - $1.63
Actual: 5.2% increase to $1.63
Forward yield: 2.11%
MGE Energy continued its pattern of 4-5% dividend growth.
Altria Group, Inc. ( MO ) - 13 years
Prediction: 3.3 - 4.4% increase to $3.72 - $3.76
Actual: 4.4% increase to $3.76
Forward yield: 8.36%
The tobacco company's latest dividend boost was in line with the expected EPS growth rate.
Nordson Corporation ( NDSN ) - 59 years
Prediction: 13.7 - 19.6% increase to $2.32 - $2.44
Actual: 27.5% increase to $2.60
Forward yield: 1.16%
This year's 27% boost follows up last year's 30% increase; Nordson has grown its dividend by 66% over the last two years.
Ritchie Bros. Auctioneers Incorporated ( RBA ) - 22 years
Prediction: 5.0 - 8.0% increase to $1.05 - $1.08
Actual: 8.0% increase to $1.08
Forward yield: 1.54%
The auctioneer's dividend growth rate fell from last year's 14% increase, but this year's boost should help investors keep up with inflation.
The Scotts Miracle-Gro Company ( SMG ) - 13 years
Prediction: 1.5 - 3.0% increase to $2.68 - $2.72
Actual: 0% increase to $2.64
Forward yield: 4.32%
Battered by a heavy debt load and falling earnings, Scotts Miracle Gro is deferring its dividend boost this year. The company has until the end of 2023 to keep its dividend growth streak going.
Skyworks Solutions, Inc. ( SWKS ) - 8 years
Prediction: 11.6 - 15.2% increase to $2.50 - $2.58
Actual: 10.7% increase to $2.48
Forward yield: 2.52%
The chip manufacturer just missed my expectations in its 8th year of dividend growth.
Verizon Communications Inc. ( VZ ) - 17 years
Prediction: 1.6 - 3.1% increase to $2.60 - $2.64
Actual: Deferred to September
Verizon should announce its dividend boost after Labor Day.
Westlake Corporation ( WLK ) - 19 years
Prediction: 14.3 - 21.0% increase to $1.36 - $1.44
Actual: 20.0% increase to $1.428
Forward yield: 1.49%
The specialty chemical company rewarded investors with a big boost after blowout earnings growth.
Essential Utilities, Inc. ( WTRG ) - 31 years
Prediction: 6.0 - 7.0% increase to $1.1372 - $1.1479
Actual: 7.0% increase to $1.148
Forward yield: 2.34%
It was another year of 7% dividend growth for the parent company of water utility Aqua and natural gas utility Peoples.
Predictions for Dividend Increases for September
There are 12 companies I expect to announce their annual dividend increases in September. First, here are my predictions for three featured companies:
Lockheed Martin Corporation ( LMT ) - 18 years of dividend growth
The defense and aeronautics mega-contractor has seen sales and earnings grow rapidly under prior Presidential administrations, but over the last two years has seen EPS contract from a high of $24.30 in 2020 to a projected $21.55 this year. Initially projected to resume its earnings growth, Lockheed got a hit to EPS due to the need to recharacterize some pension contributions that were not directly chargeable to Government contracts. One piece of good news is that although the company has borrowed a decent amount, it just refinanced all its near-term debt to fixed 10-year debt, fixing the need for cash in the near-term. Lockheed has historically boosted its payout by double-digits, but with the lower earnings dividend growth fell to below 8% last year. With nearly two decades of dividend growth under its belt, Lockheed has too much invested to stop growing its dividend, but the continuing drop in earnings will put pressure on the growth rate. Even with the reduced EPS, Lockheed's payout ratio is around 50% leaving room for another boost in the high single digits.
Prediction: 7.1 - 8.9% increase to $12.00 - $12.20
Predicted Forward Yield: 2.87 - 2.91%
McDonald's Corporation ( MCD ) - 45 years
Like most companies, international restaurant chain McDonald's took a hit during the pandemic. However, the company recovered quickly in 2021, with worldwide revenues up 18% and adjusted EPS rebounding by 59% year-over-year. The rebound is continuing into 2022, with adjusted EPS up another 13% year-over-year (18% when currency effects are removed). The company continues to generate plenty of free cash flow - McDonald's has compounded its dividend by 8% over the last 5 years and has bought back 7.5% of its outstanding shares over that same time. And with continued earnings growth, investors can expect McDonald's to keep up the dividend growth at the same rate.
Prediction: 6.9 - 8.7% increase to $5.90 - $6.00
Predicted Forward Yield: 2.32 - 2.36%
Microsoft ( MSFT ) - 18 years
Microsoft continues to fire on all cylinders. With only a couple of exceptions, all of Microsoft's products and services saw increased revenues in fiscal 2022 (ending June 30th), and across all business sectors. Cloud services, in particular, saw continued rapid growth, with Intelligent Cloud business segment revenues up 20%. The Productivity & Business Processes segment revenues, incorporating the Office suite of products among others, was up 13%. The revenue growth drove 16% adjusted EPS growth to $9.21, giving Microsoft a payout ratio around 25%. Like McDonald's above, Microsoft dedicates some of its free cash flow to stock buybacks. Unlike McDonald's, Microsoft has bought back less than 3% of its outstanding stock over the last 5 years. But with continued revenue and earnings growth - impressive for such a large company (nearly $2T in market cap) - will come continued dividend growth; investors can look to the company to continue to compound the payout at north of 10%.
Prediction: 11.3 - 16.1% increase to $2.76 - $2.88
Predicted Forward Yield: 1.08 - 1.12%
Here are my predictions for 9 other companies which should announce annual increases in September:
| Company |
| Ticker |
| Industry |
| Prediction |
| New Annual Rate |
| (# yrs) |
| Accenture plc |
| [[ACN]] (11) |
| IT Services |
| 9.3% - 11.3% |
| $4.24 - $4.32 |
| With expected EPS growth of 21 - 22%, the consulting services company should be able to announce another dividend increase in line with its historical dividend growth rate of 10%. |
| Brady Corporation |
| [[BRC]] (37) |
| Security & Protection |
| 4.4% - 6.7% |
| $0.94 - $0.96 |
| Although the maker of ID products historically increases its dividend by about 2% annually, with little debt and expected EPS growth of 12-15%, investors can expect a slightly larger boost this year. |
| The First of Long Island Corp. |
| [[FLIC]] (26) |
| Banks - Regional |
| 10.0% - 12.5% |
| $0.88 - $0.90 |
| Between lower interest expenses and higher loan volumes, FLIC's EPS was up 11% in the first 6 months of 2022. This should lead to a boost larger than last year's 5% increase. |
| Honeywell International |
| [[HON]] (12) |
| Specialty Industrial Machinery |
| 4.6% - 6.1% |
| $4.10 - $4.16 |
| Although the industrial company is guiding adjusted EPS growth to between 6 - 9%, Honeywell's heavy debt load will likely keep its latest increase to the lower end of that range. |
| Ingredion Inc. |
| [[INGR]] (10) |
| Packaged Foods |
| 1.5% - 3.1% |
| $2.64 - $2.68 |
| Ingredion provides inputs to food products around the world. The company is guiding adjusted EPS growth of between 3 and 12% for 2022. Given the uncertainty with the wide range, and the fact the company has boosted its dividend by 4 cents or less over each of the last 3 years, investors can expect another year of small growth. |
| New Jersey Resources Corp. |
| [[NJR]] (25) |
| Utilities - Gas |
| 6.2% - 9.0% |
| $1.54 - $1.58 |
| The central New Jersey-based utility has built a consistent dividend growth history in the 6 - 7% range. The company recently raised its adjusted EPS guidance for 2022 and is expecting around 13% growth, which should allow New Jersey Resources to maintain its dividend growth rate. |
| OGE Energy Corp. |
| [[OGE]] (14) |
| Utilities - Electric |
| 6.1% - 8.5% |
| $1.74 - $1.78 |
| After suffering losses in 2020 due to having to write down equity investments in a natural gas midstream investment, OGE posted earnings of $3.68 in 2021. With the return to profitability, the company should return to its usual high single digit dividend growth after last year's 2% boost. |
| Philip Morris International |
| [[PM]] (13) |
| Tobacco |
| 4.0% - 4.8% |
| $5.20 - $5.24 |
| The tobacco company has a decade long dividend growth rate of 5%, which generally keeps the payout ratio around 80 - 85%. The company is guiding to EPS growth of 8 - 10% in 2022. While this would usually mean a payout bump in that range, I expect Philip Morris will keep the dividend growth in the historical range. |
| Williams-Sonoma |
| [[WSM]] (16) |
| Specialty Retail |
| 17.9% - 21.8% |
| $3.68 - $3.80 |
| Williams-Sonoma, owner of the Pottery Barn, West Elm and the eponymous Williams Sonoma Home brands, produces and markets products for the home. The company does semi-annual dividend boosts. Earnings are skyrocketing right now and investors can expect a good increase from this debt-free company. |
Summary
It was a good month for dividend growth investors. 15 companies announced their annual dividend increases, and some very good ones, at that.
Investors were rewarded with double-digit boosts from 8 companies, including a nearly 40% increase from Carlisle, a 27% increase from Nordson, and a 20% increase from Westlake. While there were a few very small increases - Federal Realty came in with a 1% boost - most of the increases were of decent size. The only exception was Scotts Miracle-Gro, which skipped its regular increase due to pressure on earnings.
Another notable increase was the 1% boost from Dover, which extends the industrial company's dividend growth streak to 67 years - one of the longest among publicly traded companies.
September will bring dividend increases from another 12 companies. Double-digit boosts are expected from regional bank The First of Long Island, tech company Microsoft, and home furnisher Williams-Sonoma.
For further details see:
Microsoft, McDonald's Among 12 Companies Scheduled To Announce Annual Dividend Boosts In September