TROW - Walmart Home Depot Among 15 Companies To Announce Dividend Increases In Second Half Of February
Summary
- When it comes to annual dividend increases, February is the highlight of the year. There were at least 27 dividend boosts that were announced from a wide variety of companies.
- Widely held companies 3M, PepsiCo, and Coca-Cola all boosted their dividends in the first half of the month, with Pepsi announcing a 10% increase.
- The latter half of February will bring increases from The Home Depot, Genuine Parts, and Walmart, with a double-digit boost from Home Depot.
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 January, I provided predictions for 23 dividend growth companies that have historically announced annual payout increases in the first half of February. In this article I’ll look at another 14 dividend growth companies that I expect will announce their annual dividend increases in the second half of February.
Before I get to that, there were many other long-term dividend growth companies that announced annual increases in the first half of the month. Among them:
- I had prepared a prediction for Coca-Cola ( KO ) for this article, but the beverage company announced a 4.5% dividend increase to an annualized $1.84 on the 16th. This is Coke’s 61st year of dividend growth; the company now has a forward yield of 3.06%.
- Regional banks Commerce Bancshares ( CBSH ) and Southside Bancshares ( SBSI ) both announced dividend increases. Including a 5% share dividend, Commerce Bancshares 55th year of dividend growth is a 7% increase and gives the company a forward yield of 1.61%. Southside Bancshares’ 2.9% dividend boost is the company’s 29th year of dividend growth and gives the company a forward yield of 3.60%.
- Two REITs also announced dividend increases: storage company Extra Space Storage ( EXR ) announced an 8% increase, resulting in a forward yield of 4.08%. Residential REIT UDR, Inc. ( UDR ) announced a 10.5% increase, giving the company a forward yield of 3.75%. This is the 14th and 15th year of dividend growth for Extra Space Storage and UDR, respectively.
- Hawkins ( HWKN ) announced its 19th year of dividend growth with a 7.1% boost to give the specialty chemical company a forward yield of 1.45%.
Here are the results from my predictions from the first half of February (as always, the original predictions are available in my previous article ), followed by my predictions for the dividend increases that I’m expecting to be announced in the second half of February:
(All yields are based on stock prices at the market close on Friday, February 17th.)
Results for Dividend Increase Announcements from the First Half of February
Analog Devices ( ADI ) – 21 years of dividend growth
Prediction: 9.9 – 11.8% increase to $3.34 - $3.40
Actual: 13.2% increase to $3.44
Forward yield: 1.79%
The chipmaker’s 50% growth in adjusted EPS drove a good increase this year.
Allegion plc ( ALLE ) – 10 years
Prediction: 3.7 – 6.1% increase to $1.70 - $1.74
Actual: 9.8% increase to $1.80
Forward yield: 1.52%
The security company fell just short of another double-digit boost.
Avista Corporation ( AVA ) – 21 years
Prediction: 2.3 – 4.0% increase to $1.80 - $1.83
Actual: 4.5% increase to $1.84
Forward yield: 4.51%
The energy distributor beat my expectations as it begins its 3rd decade of dividend growth.
Church & Dwight Co., Inc. ( CHD ) – 27 years
Prediction: 3.8 – 4.8% increase to $1.09 - $1.10
Actual: 3.8% increase to $1.09
Forward yield: 1.30%
This is the 5th year of 4 or 5 cent annual dividend growth for the Arm & Hammer brand owner.
Cisco Systems, Inc. ( CSCO ) – 13 years
Prediction: 2.6 – 3.9% increase to $1.56 - $1.58
Actual: 2.6% increase to $1.56
Forward yield: 3.07%
The networking company came in with its 2nd year of sub-3% dividend growth.
Quest Diagnostics Incorporated ( DGX ) – 13 years
Prediction: 6.1 – 7.6% increase to $2.80 - $2.84
Actual: 7.6% increase to $2.84
Forward yield: 1.92%
On top of the dividend increase, the medical diagnostics company also announced a $1 billion share buyback program.
Eversource Energy ( ES ) – 25 years
Prediction: 5.9 – 7.1% increase to $2.70 - $2.73
Actual: 5.9% increase to $2.70
Forward yield: 3.36%
Eversource’s latest increase is consistent with the company’s long-term growth objective of between 5 and 7%.
Exponent, Inc. ( EXPO ) – 11 years
Prediction: 12.5 – 18.8% increase to $1.08 - $1.14
Actual: 8.3% increase to $1.04
Forward yield: 0.96%
The engineering consulting firm traditionally has boosted its dividends by at least 10%, but it looks like the “law of large numbers” is catching up to it.
Corning Incorporated ( GLW ) – 13 years
Prediction: 5.6 – 9.3% increase to $1.14 - $1.18
Actual: 3.7% increase to $1.12
Forward yield: 3.15%
With EPS down for the maker of glass panels, Corning rewarded investors with a small 4-cent boost.
Genuine Parts Company ( GPC ) – 66 years
Prediction: 8.9 – 11.7% increase to $3.90 - $4.00
Actual: Deferred to late February
The auto parts company will likely announce its latest dividend increase when it reports earnings on February 23rd.
ITT Inc. ( ITT ) – 11 years
Prediction: 13.6 – 17.4% increase to $1.20 - $1.24
Actual: 9.8% increase to $1.16
Forward yield: 1.23%
With fiscal 2022 adjusted EPS growth of below 9%, ITT’s latest increase is a decrease from last year’s 20% boost.
Jack Henry & Associates, Inc. ( JKHY ) – 33 years
Prediction: 5.1 – 7.1% increase to $2.06 - $2.10
Actual: 6.1% increase to $2.08
Forward yield: 1.23%
With GAAP and adjusted EPS down so far in fiscal 2023, Jack Henry’s latest boost is below its long-term growth average.
Moody’s Corporation ( MCO ) – 14 years
Prediction: 7.9 – 10.7% increase to $3.02 - $3.10
Actual: 10.0% increase to $3.08
Forward yield: 1.02%
Dividend growth continues to slow at the financial information company but is still outpacing inflation.
3M Company ( MMM ) – 65 years
Prediction: 0.7 – 1.3% increase to $6.00 - $6.04
Actual: 0.7% increase to $6.00
Forward yield: 5.31%
It’s another year of minimal dividend growth for 3M as it struggles with inflation and supply chain issues.
NextEra Energy, Inc. ( NEE ) – 29 years
Prediction: 9.4 – 11.8% increase to $1.86 - $1.90
Actual: 10.0% increase to $1.87
Forward yield: 2.46%
NextEra hit its declared intent of boosting dividends by 10% this year. The company has stated that it intends to compound its dividend by 10% through at least next year.
NorthWestern Corporation ( NWE ) – 19 years
Prediction: 0.8 – 1.6% increase to $2.54 - $2.56
Actual: 1.6% increase to $2.56
Forward yield: 4.38%
This is the second straight year of minimal dividend growth from the utility.
Public Service Enterprise Group Incorporated ( PEG ) – 12 years
Prediction: 2.8 – 4.6% increase to $2.22 - $2.26
Actual: 5.6% increase to $2.28
Forward yield: 3.66%
The utility rewarded investors with another 6% dividend increase.
PepsiCo, Inc. ( PEP ) – 51 years
Prediction: 6.5 – 7.8% increase to $4.90 - $4.96
Actual: 10.0% increase to $5.06
Forward yield: 2.87%
The soft drink and snack company’s dividend growth accelerated from last year’s 7% boost.
Prudential Financial, Inc. ( PRU ) – 15 years
Prediction: 4.2 – 5.8% increase to $5.00 - $5.08
Actual: 4.2% increase to $5.00
Forward yield: 4.92%
This is the insurance company’s 2nd year of 4% dividend growth, which is well below its historical growth rate.
The Sherwin-Williams Company ( SHW ) – 45 years
Prediction: 5.0 – 8.3% increase to $2.52 - $2.60
Actual: 0.8% increase to $2.42
Forward yield: 1.06%
The paint and coatings company’s latest annual dividend increase was a tiny 2 cents.
T. Rowe Price Group ( TROW ) – 37 years
Prediction: 5.0 – 6.3% increase to $5.04 - $5.10
Actual: 1.7% increase to $4.88
Forward yield: 4.11%
The bear market caused assets under management to fall, decreasing revenues and forcing a minimal dividend increase this year.
United Parcel Service, Inc. ( UPS ) – 14 years
Prediction: 7.9 – 9.2% increase to $6.56 - $6.64
Actual: 6.6% increase to $6.48
Forward yield: 3.54%
The transportation and logistics company’s latest increase is right in line with EPS growth.
Xylem Inc. ( XYL ) – 12 years
Prediction: 6.7 – 10.0% increase to $1.28 - $1.32
Actual: 10.0% increase to $1.32
Forward yield: 1.23%
Powered by 21% EPS growth in 2021 and another 8% in 2022, the water technology company broke its streak of 8-cent annual increases with this year’s 10% boost.
Predictions for Dividend Increases for the Second Half of February
There are another 14 companies I expect to announce their annual dividend increases in the second half of February. First, here are my predictions for two featured companies:
The Home Depot, Inc. ( HD ) – 13 years of dividend growth
The home improvement retailer is a cash flow machine. With a compounded growth rate of more than 16% over the last 5 years and having retired more than 13% of its outstanding shares since 2018, Home Depot continues to reward investors. The company’s growing earnings have caused the stock to nearly double over the last 5 years – a compounded rate of nearly 13.5% annually. Home Depot is projecting this year’s EPS growth in the mid-single digits and, so far sales are up 5% year-over-year, with average sales receipt growth of nearly 10% more than offsetting a 5% drop in the number of transactions.
On the downside, Home Depot sports a very high debt-to-equity ratio. In addition, this year’s expected growth rate doesn’t support another large dividend increase. Is this the year that Home Depot’s boost isn’t in the double-digits? Perhaps, but I think that the company’s payout ratio of 50% leaves room for a boost above 10%.
Prediction: 9.5 – 12.6% increase to $8.32 - $8.56
Predicted Forward Yield: 2.62 – 2.69%
Walmart Inc. ( WMT ) – 49 years
The discount mega-retailer has shown a remarkable capability to keep sales growing, despite its size. As it continues to grow, however, the company’s dividend growth is slowing. Over each of the last 9 years, Walmart has boosted its annual dividend by only 4 cents, culminating in a meager 1.8% increase last year – not enough to keep up with inflation. Will it be a full decade of 4-cent annual growth? Well, let’s take a look at Walmart’s earnings.
When the company reported earnings in February 2022, adjusted earnings grew by nearly 18%. Despite this, Walmart announced dividend increase of less than 2%. This year, the company is guiding investors to expect a decline of adjusted EPS by 6.5 to 7.5%. With this decrease, I doubt the company will announce a larger dividend boost, although there’s a chance Walmart might keep the dividend growth at around 2% with a 6-cent increase. Reinforcing this view is the fact that Walmart is planning another $10 billion of share buybacks in fiscal 2023 and recently approved another $20 billion share buyback authorization. In fact, Walmart has repurchased 7% of all its outstanding shares over the last five years and seems to be putting its excess cash flow towards share buybacks instead of dividends.
Despite its size, Walmart remains a cash flow machine and investors can expect the company to complete half a century of dividend growth in late February.
Prediction: 1.8 – 2.7% increase to $2.28 - $2.30
Predicted Forward Yield: 1.56 – 1.57%
Here are my predictions for 12 other companies which should announce annual increases in the second half of February:
| Company |
| # Yrs |
| Industry |
| Prediction (%) |
| New Annual Rate |
| Albemarle Corporation ( ALB ) |
| 28 |
| Specialty Chemicals |
| 7.6 – 13.9% |
| $1.70 - $1.80 |
| With the accelerating investment in electric vehicles, lithium producer Albemarle is well-poised to benefit. The company has invested in additional lithium mines around the world and, as a result, adjusted EPS are exploding. The company is projecting that adjusted EPS will quadruple in 2022, which will mean a larger dividend boost compared to last year’s minimal 1.3% increase. Predicted Forward Yield: 0.66 – 0.70% |
| Best Buy Co., Inc. ( BBY ) |
| 19 |
| Specialty Retail |
| 9.1 – 11.4% |
| $3.84 - $3.92 |
| Although the electronics retailer has an impressive 10-year dividend growth rate of 18%, the company’s drop in EPS after a blockbuster 2021 means investors can expect a slowing of dividend growth to around 10%. Predicted Forward Yield: 4.42 – 4.51% |
| Chubb Limited ( CB ) |
| 29 |
| Insurance |
| 2.4 – 3.6% |
| $3.40 - $3.44 |
| The insurance company’s net income fell on investment portfolio losses but operating income rose 21% as policies and premiums were up. It’ll be a 10th year of 8 – 12 cent annual dividend growth for Chubb, which should announce its dividend recommendation in late February. Predicted Forward Yield: 1.61 – 1.63% |
| Essex Property Trust ( ESS ) |
| 28 |
| REIT - Residential |
| 5.0 – 7.0% |
| $9.24 - $9.42 |
| Essex Property focuses on west coast apartment complexes. The company was able to pass on rent increases to its tenants, boosting core funds from operations (a metric similar to earnings but that takes the tax benefits of property ownership into account). While the company is looking at flat FFO growth in 2023, investors can expect a slightly higher dividend boost than last year’s 5% increase. Predicted Forward Yield: 3.90 – 3.98% |
| Leggett & Platt, Inc. ( LEG ) |
| 51 |
| Furnishings, Fixtures & Appliances |
| 0 – 0.6% |
| $1.76 - $1.77 |
| The manufacturer of bedding and car seat systems is going through rough times right now, with 2022 EPS down 23% and an expectation that 2023 EPS will be down another 25%. I expect the company to either defer its annual dividend increase or boost it by as little as possible. Predicted Forward Yield: 5.08 – 5.11% |
| McGrath RentCorp ( MGRC ) |
| 31 |
| Rental & Leasing Services |
| 6.7 – 9.9% |
| $1.94 - $2.00 |
| McGrath RentCorp provides modular buildings, portable storage, and electronic test equipment to other businesses. The company’s earnings are rebounding in 2022 after falling in 2021. The company’s dividend growth fell short last year, with the 4.6% boost well below the 5-year average of 12%. With the renewed earnings growth, investors can look forward to a larger boost this year. Predicted Forward Yield: 1.81 – 1.87% |
| Old Republic International Corporation ( ORI ) |
| 41 |
| Insurance |
| 4.3% |
| $0.96 |
| Insurer Old Republic traditionally boosts its annual dividend by 4 cents and follows up with a special dividend in the 3rd quarter of the calendar year. With 2022 core EPS down 9% to $2.79, the company has plenty of headroom for another annual increase but may not announce a special dividend this year. Predicted Forward Yield: 3.62% |
| Silgan Holdings, Inc. ( SLGN ) |
| 18 |
| Packaging & Containers |
| 12.5 – 15.6% |
| $0.72 - $0.74 |
| The maker of packaging solutions for consumer products has a compounded dividend growth rate of more than 12% over the last 5 years. Adjusted EPS were up 17% in 2022, meaning investors can look forward to another year of double-digit payout growth. Predicted Forward Yield: 1.34 – 1.38% |
| SpartanNash Company ( SPTN ) |
| 12 |
| Food Distribution |
| 9.5 – 11.9% |
| $0.92 - $0.94 |
| Dividend growth has slowed over the last few years at the food distribution company, from a 11% growth rate over the last decade to 5% over the last 5 years. In contrast to last year when EPS fell, the company is expecting adjusted EPS to grow by double-digits when it announces earnings results on February 23rd. I expect SpartanNash to announce a double-digit payout increase about a week after that. Predicted Forward Yield: 2.87 – 2.93% |
| Sempra ( SRE ) |
| 19 |
| Utilities - Diversified |
| 3.9 – 5.7% |
| $4.76 - $4.84 |
| The energy infrastructure company is aiming for annual 6 – 8% EPS growth through 2025. The company may come in a little short this year, with mid-point guidance coming in at 5%. Investors can expect another 4% boost from Sempra. Predicted Forward Yield: 3.00 – 3.05% |
| Southwest Gas Holdings, Inc. ( SWX ) |
| 17 |
| Utilities - Regulated Gas |
| 2.4 – 4.0% |
| $2.54 - $2.58 |
| Lower revenues and higher operating expenses from inflationary pressures resulted in a 27% drop in the first 3 quarters of 2022, compared to the same period in 2021. This will put pressure on the company’s next dividend increase – investors can expect a boost at or below last year’s 4.2% increase. Predicted Forward Yield: 3.90 – 3.96% |
| Telephone and Data Systems, Inc. ( TDS ) |
| 48 |
| Telecom Services |
| 0 – 2.8% |
| $0.72 - $0.74 |
| The wireless company is investing heavily in high speed fiber connections for its customers, which is hitting profitability. EPS in 2021 were down by nearly 50% from 2020, and TDS is looking at another 21% drop for 2022. The company might decide to defer its dividend boost to later in the year. Predicted Forward Yield: 5.26 – 5.40% |
Summary
February is the top month when it comes to annual dividend increases. I covered 27 companies that announced annual dividend in the first half of the month in this article, with another 15 companies coming up in the latter half of February. The highlights from the first half of the month include double-digit boosts from PepsiCo, Analog Devices, Moody’s, NextEra Energy, and Xylem. PepsiCo holds a title as a dividend king – a company that has boosted dividends by at least half a century. Another dividend king, 3M, also announced its annual dividend increase. However, it was a disappointing one – just enough to extend its dividend growth streak to 65 years. Dividend king Coca-Cola extended its streak to 61 years with a 4.5% boost.
The second half of the month will see another company join the ranks of dividend kings, as Walmart announces its 50th annual dividend boost. Good increases are expected from packaging company Silgan Holdings, auto parts manufacturer Genuine Parts, and lithium producer Albemarle, while utilities Southwest Gas and Sempra Energy should announce increases in the low-to-mid single digits.
For further details see:
Walmart, Home Depot Among 15 Companies To Announce Dividend Increases In Second Half Of February