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:
|Company||# Yrs||Industry||Prediction (%)||New Annual Rate|
|CareTrust REIT, Inc. (CTRE)||8||REIT – Healthcare Facilities||0 – 3.6%||$1.10 – $1.14|
|The health care-focused REIT’s growth in funds from operations is coming in flat for 2022, which should make CareTrust’s next annual dividend increase similar to last year’s 4 cent boost. There’s a small chance that the company will defer its next increase to later in the year. Predicted Forward Yield: 5.51 – 5.71%|
|General Dynamics (GD)||31||Aerospace & Defense||5.6 – 7.1%||$5.32 – $5.40|
|With revenue growth of 5%, led by 15% growth in the Combat Systems business segment, General Dynamics posted EPS growth of 5.5%. This will be enough for another year of 6% dividend growth for investors. Predicted Forward Yield: 2.29 – 2.33%|
|Globe Life Inc. (GL)||18||Insurance – Life||6.0 – 9.6%||$0.88 – $0.91|
|The insurance company’s underwriting income grew 20% in 2022, powering 19% growth in operating income. The company spends its free cash flow on share buybacks (having repurchased 12% of all outstanding shares over the last 5 years), as well as dividends, so investors can expect a slight increase from last year’s 5% boost. Predicted Forward Yield: 0.72 – 0.75%|
|Horace Mann Educators Corporation (HMN)||13||Insurance – Property & Casualty||0 – 3.1%||$1.28 – $1.32|
|Horace Mann is a financial company that serves teachers and other educators. The company’s EPS fell 60% in 2022 and while Horace Mann is expecting EPS growth of 40% in 2023, the company’s current payout ratio of 85% will limit dividend growth this year, with the possibility that the company defers its annual boost to later in the year. Predicted Forward Yield: 3.46 – 3.56%|
|Hurco Companies, Inc. (HURC)||10||Specialty Industrial Machinery||6.7 – 10.0%||$0.64 – $0.66|
|This debt-free industrial tools company is on track to begin its 2nd decade of dividend growth in March. The company’s EPS grew in fiscal 2022 (which ended October 31, 2021) by 22%, giving plenty of room for another increase. Unfortunately for investors, Hurco has established a pattern of 4-cent annual increases for the last 8 years. I expect that the company will announce a 9th year, although investors may see a slightly larger increase. Predicted Forward Yield: 2.21 – 2.28%|
|Kadant Inc. (KAI)||10||Specialty Industrial Machinery||3.8 – 7.7%||$1.08 – $1.12|
|The specialty industrial machinery company will begin its 2nd decade of dividend growth, powered by adjusted EPS growth of 18%. Despite the double-digit earnings growth, I expect Kadant to maintain its dividend growth rate in the 4 – 5% range. Predicted Forward Yield: 0.51 – 0.53%|
|Linde plc (LIN)||29||Specialty Chemicals||10.3 – 12.0%||$5.16 – $5.24|
|Dividend growth should accelerate at industrial gases company Linde. With 2022 adjusted EPS growth of 15% and an expectation of 9 – 12% adjusted EPS growth in 2023, investors should see another double-digit boost like last year’s 10% increase. Predicted Forward Yield: 1.48 – 1.51%|
|Steel Dynamics, Inc. (STLD)||13||Steel||20.6 – 26.5%||$1.64 – $1.72|
|After a massive 31% dividend increase last year, investors could be forgiven if they are doubtful about continued dividend growth. But 2021 might not have been a one-off: 2022 EPS were up another 32% which gives the metals company room for another big boost. Predicted Forward Yield: 1.38 – 1.45%|
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.