Apple will announce its twelfth annual dividend enhance in early Might. Nikada/iStock Unreleased by way of Getty Photographs
That is the most recent in my sequence of articles the place I present predictions of annual dividend will increase for long-term dividend development firms. Within the center of April, I offered predictions for 10 dividend development firms which have traditionally introduced annual payout will increase within the second half of April. On this article, I’ll take a look at one other 14 dividend development firms that I count on will announce their annual dividend will increase within the first half of Might.
Listed below are the outcomes from my predictions from the second half of April (the unique predictions can be found here), adopted by my predictions for the dividend will increase that I’m anticipating to be introduced within the first half of Might:
(All yields are primarily based on inventory costs on the market shut on Friday, April twenty sixth.)
Outcomes for Dividend Improve Bulletins from the Second Half of April
Ameriprise Monetary, Inc. (AMP) – 19 years of dividend development
Prediction: 10.4 – 12.6% enhance to $5.96 – $6.08
Precise: 9.6% enhance to $5.92
Ahead yield: 1.44%
Whereas not hitting double digits, the monetary companies agency’s newest dividend increase is larger than final 12 months’s 8% enhance.
American Water Works Firm, Inc. (AWK) – 16 years
Prediction: 6.7 – 8.8% enhance to $3.02 – $3.08
Precise: Deferred to early Might
The utility will seemingly announce its subsequent dividend enhance when it releases earnings on Might 2nd.
First Monetary Bankshares, Inc. (FFIN) – 13 years
Prediction: 5.6 – 8.3% enhance to $0.76 – $0.78
Precise: Deferred to early Might
Regional financial institution First Monetary ought to announce its 14th 12 months of dividend development in early Might.
W. W. Grainger, Inc. (GWW) – 53 years
Prediction: 5.9 – 8.1% enhance to $7.88 – $8.04
Precise: 10.2% enhance to $8.20
Ahead yield: 0.88%
Dividend development continues to speed up on the industrial distributor.
Worldwide Enterprise Machines Company (IBM) – 28 years
Prediction: 0.6 – 1.2% enhance to $6.68 – $6.72
Precise: Deferred to early Might
IBM ought to announce its twenty ninth 12 months of dividend development within the first week of Might.
Johnson & Johnson (JNJ) – 63 years
Prediction: 5.9 – 6.7% enhance to $5.04 – $5.08
Precise: 4.2% enhance to $4.96
Ahead yield: 3.39%
Dividend development on the healthcare large continues to gradual; this 12 months’s enhance is decrease than the 5.3% increase buyers noticed final 12 months.
Lithia & Driveway (LAD) – 14 years
Prediction: 10.0 – 14.0% enhance to $2.20 – $2.28
Precise: 6.0% enhance to $2.12
Ahead yield: 0.81%
A drop in EPS pressured the auto dealership chain to gradual its fee of dividend development, to roughly a 3rd of the common development fee during the last decade.
MetLife, Inc. (MET) – 13 years
Prediction: 2.8 – 5.8% enhance to $2.14 – $2.20
Precise: 4.8% enhance to $2.18
Ahead yield: 3.10%
The monetary companies firm breaks its 6-year streak of 8-cent annual dividend development with this 12 months’s 10 cent increase.
Parker-Hannifin Company (PH) – 69 years
Prediction: 12.8 – 15.5% enhance to $6.68 – $6.84
Precise: 10.1% enhance to $6.52
Ahead yield: 1.18%
The engineering firm continued its sample of 10%+ dividend will increase.
Portland Normal Electrical Firm (POR) – 18 years
Prediction: 4.2 – 5.8% enhance to $1.98 – $2.01
Precise: 5.3% enhance to $2.00
Ahead yield: 4.67%
The utility’s dividend enhance is true consistent with its dividend development fee of 5 – 6%.
RTX Company (RTX) – 30 years
Prediction: 4.2 – 6.8% enhance to $2.46 – $2.52
Precise: Deferred to early Might
Protection contractor Raytheon ought to announce its subsequent dividend enhance the primary week of Might.
The Southern Firm (SO) – 23 years
Prediction: 1.4 – 2.9% enhance to $2.84 – $2.88
Precise: 2.9% enhance to $2.88
Ahead yield: 3.93%
The Atlanta-based utility’s newest dividend enhance is true consistent with its 3% long-term dividend development fee.
Sonoco Merchandise Firm (SON) – 42 years
Prediction: 2.0 – 3.9% enhance to $2.08 – $2.12
Precise: 2.0% enhance to $2.08
Ahead yield: 3.68%
With a drop in gross sales and EPS, dividend development slowed on the packaging firm.
Sysco Company (SYY) – 55 years
Prediction: 2.0 – 4.0% enhance to $2.04 – $2.08
Precise: 2.0% enhance to $2.04
Ahead yield: 2.65%
It’s one other 12 months of two% dividend development from foodservice firm Sysco.
The Vacationers Firms, Inc. (TRV) – 22 years
Prediction: 7.0 – 9.0% enhance to $4.28 – $4.36
Precise: 5.0% enhance to $4.20
Ahead yield: 1.97%
Regardless of accelerating dividend development on the insurer, this 12 months’s enhance is decrease than anticipated.
UGI Company (UGI) – 36 years
Prediction: 2.7 – 5.3% enhance to $1.54 – $1.58
Precise: Deferred to early Might
The utility will seemingly announce its subsequent dividend enhance the day earlier than it releases earnings on Might 2nd.
Predictions for Dividend Will increase within the First Half of Might
There are 12 long-term dividend development firms I count on to announce their annual will increase within the first half of Might. First, right here is my prediction for 2 featured firms:
Apple Inc. (AAPL) – 11 years of dividend development
Dividend development has been slowing at Apple during the last a number of years – after a 15% enhance in 2018, the most important enhance between 2019 – 2023 the 7.3% increase in 2020. Final 12 months’s enhance was even decrease at 4.3%. On the whole, the dividend will increase have been across the mid-single digit percentages. This displays the corporate’s precedence on utilizing its free money circulation to purchase again shares; the corporate has purchased again 1 in 8 excellent shares since 2019.
Apple has a buyer base that could be very loyal, which permits it to generate an enormous quantity of free money circulation. However there’s proof that Apple’s clients are getting overextended. Within the latest quarterly earnings report and in 2023’s annual report, gross sales of Mac computer systems, iPads, and Wearables had been down year-over-year. iPhone gross sales dropped in 2023 and rebounded barely within the first quarter of 2024. The one constant development got here from its Companies merchandise, which embrace promoting, AppleCare prolonged warranties, cloud companies, cost companies (such because the Apple bank card and Apple Pay cost system), and digital content material (which incorporates its varied subscription-based companies like Apple Health+, the Apple Arcade gaming service, Apple Music, Apple Information+ and Apple TV+ companies). Revenues in 2023 had been down by 1% and EPS grew lower than that. Earnings did rebound within the first quarter of 2024, however income continued to stall, with quarterly development solely at 2%. All the earnings development got here from development in Apple companies. Till development from Apple Product gross sales returns or Companies turns into a bigger share of firm income, buyers can count on dividend development to stay within the mid-single digit vary.
Prediction: 4.2 – 6.3% enhance to $1.00 – $1.02
Predicted Ahead Yield: 0.59 – 0.60%
Cardinal Well being, Inc. (CAH) – 28 years
Cardinal Well being distributes medical and laboratory merchandise, and pharmaceutical merchandise to well being care suppliers. The corporate additionally gives expertise options to measure and enhance efficiency and knowledge options for healthcare amenities. Dividend development has stalled during the last a number of years, with the corporate’s 5-year compounded development fee of 1% properly under the 5% fee during the last decade, representing a pointy slowdown in dividend development. Lawsuit settlements in 2021 and 2023 hit earnings, however with the lawsuits behind it, it seems to be like earnings development will return.
Adjusted EPS development (which excluded the one-time prices of settling lawsuits) rose to 14% and is anticipated to rise additional to 25% in 2024. 2023 earnings development got here primarily from income development within the Pharmaceutical Section; the 15% development there greater than made up for a 5% drop in revenues within the firm’s Medical Section. And whereas total adjusted earnings grew solely 3%, the corporate’s use of free money circulation to purchase again shares resulted within the 14% EPS development famous above. Cardinal Well being’s steering of accelerating free money circulation in 2024 means further share buybacks and simpler financing of the just lately introduced acquisition of Specialty Networks, a supplier of analytic and “big data” capabilities to well being care suppliers. It’ll additionally imply a small acceleration from final 12 months’s 1% dividend development.
Prediction: 2.0 – 4.0% enhance to $2.0424 – $2.0825
Predicted Ahead Yield: 1.98 – 2.02%
Listed below are my predictions for 10 different long-term dividend development firms which ought to announce annual will increase within the first half of Might:
| Firm | # Yrs | Business | Prediction (%) | New Annual Fee |
| Alerus Monetary Company (ALRS) | 25 | Monetary – Regional Banks | 0 – 5.2% | $0.76 – $0.80 |
| Earnings fell in 2023 for the monetary companies firm took a loss on the sale of funding securities. The ensuing 72% drop in EPS offers Alerus a payout ratio of 130% and buyers little hope for a big dividend increase this 12 months. The very best that buyers can hope for is one other 12 months of a 4-cent annual enhance. Predicted Ahead Yield: 3.74 – 3.94% | ||||
| CNO Monetary Group (CNO) | 11 | Monetary – Insurance coverage | 6.70% | $0.64 |
| Though the monetary companies firm has constructed an 11-year historical past of dividend development, CNO Monetary focuses on share buybacks, with the share depend dropping from 148 million shares to lower than 110 million shares since 2019. And though EPS fell greater than 50% in 2023, the corporate’s payout ratio of 25% leaves room for a tenth straight 12 months of 4-cent annual dividend development. Predicted Ahead Yield: 2.42% | ||||
| Chesapeake Utilities Company (CPK) | 20 | Utilities – Regulated Fuel | 4.2% – 5.9% | $2.46 – $2.50 |
| Chesapeake Utilities tends to compound its dividend round 8 – 10% yearly. Nevertheless, this 12 months acquired Florida Metropolis Fuel in November 2023. Whereas the acquisition got here too late to influence 2023 earnings, Chesapeake continues to be digesting the acquisition, which can trigger EPS development to gradual to under 2% from 5.4% in 2023. The slowdown can be because of Chesapeake issuing 25% extra shares to finance the acquisition. The earnings slowdown implies that dividend development ought to gradual as properly. Buyers can count on a rise of roughly half final 12 months’s 10% enhance. Predicted Ahead Yield: 2.34 – 2.38% | ||||
| Expeditors Worldwide of Washington, Inc. (EXPD) | 29 | Industrials – Built-in Freight & Logistics | 1.4% – 2.9% | $1.40 – $1.42 |
| After getting hit arduous by the pandemic, earnings on the transport and logistics firm are affected by provide chain stressors from the conflicts within the Center East and Purple Sea. EPS fell 40% in 2023 and the corporate’s anticipating persevering with headwinds, with additional staffing cuts deliberate. The one brilliant aspect proper now could be Expeditors’ 28% payout ratio, which leaves room for a small dividend enhance. Predicted Ahead Yield: 1.24 – 1.25% | ||||
| FactSet Analysis Techniques, Inc. (FDS) | 25 | Monetary – Monetary Knowledge & Inventory Exchanges | 8.2% – 10.2% | $4.24 – $4.32 |
| FactSet gives monetary knowledge to just about 8000 clients around the globe. The corporate sports activities a superb dividend development fee within the 9 – 11% vary during the last decade, with final 12 months’s 10.1% increase typical of the corporate’s will increase. FactSet is guiding adjusted EPS development in 2024 to between 7 and 10%, just like 2023’s EPS development of 8%. Buyers can sit up for one other enhance round 10% this 12 months. Predicted Ahead Yield: 1.01 – 1.02% | ||||
| Leggett & Platt, Inc. (LEG) | 52 | Shopper Cyclical – Furnishings, Fixtures & Home equipment | 0% – 2.2% | $1.84 – $1.88 |
| The bedding and furnishings producer is coping with tough instances. Earnings have been slipping since 2021, hitting a nadir final 12 months as the corporate misplaced $1.00 a share in 2023. Leggett & Platt expects to swing again to revenue this 12 months. Nevertheless, even on the excessive finish of steering, the corporate will sport a payout ratio simply shy of 150%. With a yield north of 10%, the market is pricing in a dividend lower. I feel it’s extra seemingly that the corporate holds its dividend regular and never stroll away from a half-century of dividend development, and there’s a really small probability that the corporate pronounces a minimal enhance. Predicted Ahead Yield: 10.23 – 10.45% | ||||
| MSA Security Integrated (MSA) | 52 | Industrials – Safety and Safety Companies | 4.3% – 6.4% | $1.96 – $2.00 |
| Dividend development at MSA Security has slowed, hitting a low of two.2% final 12 months, as the corporate focuses on lowering its debt load. The excellent news for buyers is that debt has fallen at MSA and revenues and adjusted EPS are rising at double digits. The one mitigating issue is that GAAP EPS are nonetheless beneath strain. Regardless of this, free money circulation is rising shortly, so buyers can count on dividend development to choose up. I count on the following dividend enhance to be across the firm’s long-term development fee of 5%. Predicted Ahead Yield: 1.04 – 1.06% | ||||
| Northrop Grumman Company (NOC) | 20 | Industrials – Aerospace & Protection | 8.0% – 9.1% | $8.08 – $8.16 |
| One of many massive three protection contractors, Northrop Grumman noticed gross sales develop in 2023, due primarily to double-digit development in its Area Techniques enterprise phase. Sadly, earnings fell as a result of firm taking a loss on its B-21 low-rate preliminary manufacturing contract. Nevertheless, the corporate is anticipating EPS to rebound in 2024 and to develop free money circulation at 15% yearly by way of 2026. So, regardless of the autumn in earnings, I count on the corporate to match or barely exceed final 12 months’s 8% dividend enhance. Predicted Ahead Yield: 1.68 – 1.70% | ||||
| Pool Company (POOL) | 13 | Industrials – Industrial Distribution | 7.3% – 9.1% | $4.72 – $4.80 |
| The wholesale distributor of swimming pool and different yard merchandise has constructed an envious dividend development fee of 20% during the last decade. Final 12 months’s dividend enhance of 10% didn’t sustain with that fee and buyers can count on to see a seamless slowdown. EPS development slowed from 2022 to 2023, and the corporate is offering 2024 EPS steering starting from a drop of two% to five.6% development. Even when the corporate hits the excessive level, it received’t justify something near a 20% dividend enhance. Search for a lift within the excessive single digits as dividend development continues to gradual. Predicted Ahead Yield: 1.27 – 1.29% | ||||
| Tetra Tech, Inc. (TTEK) | 9 | Industrials – Engineering & Building | 13.5% – 17.3% | $1.18 – $1.22 |
| The environmental engineering consulting firm is constructing a superb file for buyers because it completes its first decade as a dividend development firm. Tetra Tech has a 5-year compounded development fee of 17%; final 12 months’s increase of 13% was one of many smaller ones during the last decade. The corporate grew EPS by 5% in 2023, however just lately raised its 2024 steering and is now anticipating shut to twenty% EPS development. With a payout ratio of 20%, buyers can sit up for one other 12 months of mid-teen proportion development. Predicted Ahead Yield: 0.61 – 0.63% | ||||
Abstract
Many of the dividend will increase we noticed within the third and fourth weeks of April had been very modest, with firms like Southern Firm and Sysco boosting their payouts by a minimal quantity to maintain their dividend development information going. Nevertheless, there have been a number of good will increase – Grainger and Parker-Hannifin introduced 10% will increase, whereas Ameriprise introduced a rise simply shy of 10%. For buyers centered on firms with lengthy dividend development histories, the beforehand talked about Parker-Hannifin prolonged its file to 69 years, well being care large Johnson & Johnson prolonged its streak to 63 years, Sysco introduced its fifty fifth 12 months of dividend development, and Grainger introduced its 53rd 12 months of dividend development.
Developing within the first half of Might, I’m anticipating extensively held tech firm Apple to announce a rise within the mid-single digit percentages, whereas well being care firm Cardinal Well being ought to announce a rise within the low-single digit percentages. One other important enhance contains aerospace and protection firm Northrop Grumman, from which I’m anticipating an 8 – 9% enhance. Lastly, dividend king Leggett & Platt – with a 52-year file of dividend development – is susceptible to skipping its annual enhance and, with an enormous 10% yield and falling earnings, is susceptible to a possible dividend lower.
