13 Companies To Start 2023 With Annual Dividend Increases

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 November, I provided predictions for 19 dividend growth companies that have historically announced annual payout increases in December. In this article I’ll look at another 13 dividend growth companies that I expect will announce their annual dividend increases in January.

Here are the results from my predictions from December (as always, you can review the original predictions), followed by my predictions for the dividend increases that I’m expecting to be announced in January:

(All yields are based on stock prices at the market close on Friday, December 30th.)

Results for Dividend Increase Announcements from December

Abbott Laboratories (ABT) – 51 years

Prediction: 3.2 – 5.3% increase to $1.94 – $1.98

Actual: 8.5% increase to $2.04

Forward yield: 1.86%

Abbott Labs’ latest dividend increase beat my expectations, but fell short of its long-term average growth rate as demand for COVID testing kits slows.

Amgen Inc. (AMGN) – 12 years

Prediction: 5.7 – 8.8% increase to $8.20 – $8.44

Actual: 9.8% increase to $8.52

Forward yield: 3.24%

Dividend growth from the biotechnology company slowed from last year, but not as much as I expected.

Broadcom Inc. (AVGO) – 14 years of dividend growth

Prediction: 12.2 – 14.6% increase to $18.40 – $18.80

Actual: 12.2% increase to $18.40

Forward yield: 3.29%

Dividend growth continues to slow at the semiconductor company.

Balchem Corporation (BCPC) – 13 years

Prediction: 10.9 – 14.1% increase to $0.71 – $0.73

Actual: 10.9% increase to $0.71

Forward yield: 0.58%

The specialty chemical company continues to boost its dividend by double-digit percentages.

Franklin Resources, Inc. (BEN) – 43 years

Prediction: 3.4% increase to $1.20

Actual: 3.4% increase to $1.20

Forward yield: 4.55%

This is the 4th straight year of 4-cent annual growth for the investment manager.

Bristol-Myers Squibb Company (BMY) – 17 years

Prediction: 4.6 – 9.3% increase to $2.26 – $2.36

Actual: 5.6% increase to $2.28

Forward yield: 3.17%

With EPS growth in the low single digit percentages, the drug maker’s dividend growth was bound to slow from last year’s 10% increase.

CubeSmart (CUBE) – 14 years

Prediction: 14.0 – 18.6% increase to $1.96 – $2.04

Actual: 14.0% increase to $1.96

Forward yield: 4.87%

The self-storage REIT continues its outstanding dividend growth rate with another double-digit increase.

Ecolab Inc. (ECL) – 31 years

Prediction: 2.0 – 3.9% increase to $2.08 – $2.12

Actual: 3.9% increase to $2.12

Forward yield: 1.46%

Ecolab’s earnings are coming in flat for 2022, leading to a slowdown in dividend growth.

Eastman Chemical Company (EMN) – 14 years

Prediction: 7.9 – 9.9% increase to $3.28 – $3.34

Actual: 3.9% increase to $3.16

Forward yield: 3.88%

After good EPS growth last year, the growth stalled in 2022 – leading to a lower than expected dividend increase.

Graco Inc. (GGG) – 26 years

Prediction: 11.9 – 16.7% increase to $0.94 – $0.98

Actual: 11.9% increase to $0.94

Forward yield: 1.40%

Graco continues its history of double-digit dividend growth.

Eli Lilly and Company (LLY) – 10 years

Prediction: 6.1 – 8.2% increase to $4.16 – $4.24

Actual: 15.3% increase to $4.52

Forward yield: 1.24%

Despite a drop in EPS and a heavy debt load, Eli Lilly came through with an outstanding dividend boost this year.

Mastercard Incorporated (MA) – 12 years

Prediction: 17.3 – 22.4% increase to $2.30 – $2.40

Actual: 16.3% increase to $2.28

Forward yield: 0.66%

Mastercard’s latest boost was a little lower than expected, but still an improvement from last year’s 11% increase.

McCormick & Company (MKC) – 24 years

Prediction: 6.8 – 9.5% increase to $1.58 – $1.62

Actual: 5.4% increase to $1.56

Forward yield: 1.88%

The spices and flavoring company latest dividend increase was lower than expected due to the effects of inflation and the strength of the dollar impacting earnings.

Merck & Co. (MRK) – 13 years

Prediction: 4.2 – 7.2% increase to $2.88 – $2.96

Actual: 5.8% increase to $2.92

Forward yield: 2.63%

Merck’s boost this year is in line with its long-term dividend growth rate.

Nucor Corporation (NUE) – 50 years

Prediction: 12.0 – 20.0% increase to $2.24 – $2.40

Actual: 2.0% increase to $2.04

Forward yield: 1.55%

The metals company returned to its usual rate of dividend growth after last year’s surprise 23% increase.

Pfizer Inc. (PFE) – 13 years

Prediction: 3.8 – 7.5% increase to $1.66 – $1.72

Actual: 2.5% increase to $1.64

Forward yield: 3.20%

It’s a third year of 4-cent annual dividend growth from the drug manufacturer.

Pentair plc (PNR) – 47 years

Prediction: 4.8 – 7.1% increase to $0.88 – $0.90

Actual: 4.8% increase to $0.88

Forward yield: 1.96%

The water pump and filtration company continued its pattern of 4 – 6 cent annual dividend growth.

RGC Resources (RGCO) – 23 years

Prediction: 2.6 – 5.1% increase to $0.80 – $0.82

Actual: 1.3% increase to $0.79

Forward yield: 3.58%

This small-cap natural gas utility announced an annual dividend increase of one cent to keep its growth streak going.

SEI Investments Company (SEIC) – 32 years

Prediction: 7.5 – 10.0% increase to $0.86 – $0.88

Actual: 7.5% increase to $0.86

Forward yield: 1.48%

This year’s payout increase from the investment manager is right in line with its 5-year compounded growth rate.

Stryker Corporation (SYK) – 30 years

Prediction: 5.0 – 7.2% increase to $2.92 – $2.98

Actual: 7.9% increase to $3.00

Forward yield: 1.23%

Medical device designer and manufacturer came in with a slightly larger dividend increase than I expected.

The Hanover Insurance Group, Inc. (THG) – 19 years

Prediction: 6.7% increase to $3.20

Actual: 8.0% increase to $3.24

Forward yield: 2.40%

The insurer broke its pattern of 20-cent annual dividend growth with a 24-cent increase this year.

The Toro Company (TTC) – 20 years

Prediction: 11.7 – 15.0% increase to $1.34 – $1.38

Actual: 13.3% increase to $1.36

Forward yield: 1.20%

It’s another year of double-digit dividend growth from the landscape and construction company.

WEC Energy Group (WEC) – 20 years

Prediction: 5.8 – 7.2% increase to $3.08 – $3.12

Actual: 7.2% increase to $3.12

Forward yield: 3.33%

Utility WEC Energy met its goal of a dividend payment of 65 – 70% of EPS.

Predictions for Dividend Increases for January

There are 13 companies I expect to announce their annual dividend increases in January. First, here are my predictions for three featured companies:

Air Products and Chemicals (APD) – 40 years of dividend growth

Air Products is an industrial gases company that provides raw materials to customers in scores of industries, including chemicals, electronics, and food production. The company also designs and operates carbon capture projects around the world, benefitting from clean air initiatives. The company announced fiscal 2022 results in early November, reporting adjusted EPS growth of 15% and guiding 2023 earnings growth to between 9% and 12%, specifically because of increased sales volume and its ability to pass along price increases to its customers. The company has minimal debt and a very modest payout ratio. As such, the company is poised to start its 5th decade of dividend growth, and investors should see an increase right around the company’s long-term dividend growth rate of 10%.

Prediction: 9.9 – 12.3% increase to $7.12 – $7.28

Predicted Forward Yield: 2.31 – 2.36%

Cincinnati Financial Corporation (CINF) – 62 years

The property and casualty insurer saw its financials deteriorate in 2022 after an outstanding 2021. With losses from Hurricane Ian hitting the company, Cincinnati Financial’s combined ratio, a measure of profitability for insurers (where lower is better), exceeded 100% – meaning the company had more expenses and paid out more in claims than it collected inn premiums. The company’s adjusted EPS over the first nine months of 2022 fell 33%. After a nearly 10% boost last year, investors can expect the company to pull back to its traditional 5 – 6% dividend growth rate this year.

Prediction: 4.3 – 6.5% increase to $2.88 – $2.94

Predicted Forward Yield: 2.81 – 2.87%

Kimberly-Clark Corporation (KMB) – 50 years

The consumer products company is dealing with a wide range of headwinds to its businesses. In the United States, retail sales in the Personal Care and Consumer Tissue segments are flat; in its Professional Business Segment, sales are up only in the mid-single digits. In general, Kimberly-Clark is passing through price hikes to the customer, but suffering declines in sales volumes. So after a 20% drop in adjusted EPS in 2021, the company is guiding to another drop of 8% for the full year of 2022. Coupled with heavy debt, the rising payout ratio means that investors in Kimberly-Clark can expect another minimal dividend increase as the company starts its 6th decade of dividend growth.

Prediction: 0.9 – 1.7% increase to $4.68 – $4.72

Predicted Forward Yield: 3.45 – 3.48%

Here are my predictions for the 10 other companies which should announce annual increases in January:

Company	# Yrs	Industry	Prediction (%)	New Annual Rate
Archer-Daniels-Midland (ADM)	47	Farm Products	7.5 – 12.5	$1.72 – $1.80
Agricultural and nutrition company ADM is seeing very fast earnings growth, as the company benefits from increased demand for plant-based proteins and the company is able to pass along price increases. Over the first 9 months of 2022, adjusted EPS grew by 60%, following on 2021’s 45% adjusted EPS growth. ADM is likely to announce another 8% increase, similar to last year’s boost, with a chance of a double-digit increase. Predicted Forward Yield: 1.85 – 1.94%.
Apogee Enterprises, Inc. (APOG)	11	Building Products & Equipment	9.1 – 11.4	$0.96 – $0.98
Architectural services and products firm Apogee Enterprises focuses on framing systems, and glass and acrylic products for buildings and museums. The company has a very consistent 10% dividend growth rate and devotes significant effort to share buybacks, having bought back nearly 13% of its outstanding share over the last 5 years. The company was able to pass along price increases to its customers; as a result, Apogee is looking at 61% adjusted EPS growth for 2022. Investors can expect another 10%-ish dividend boost, with other cash flows going to more share buybacks. Predicted Forward Yield: 2.16 – 2.20%
Booz Allen Hamilton Holding Company (BAH)	11	Consulting Services	10.5 – 15.1	$1.90 – $1.98
Booz Allen provides consulting services to the Department of Defense and Intelligence Community. Traditionally, the company has announced double-digit dividend increases, and sports a 5-year dividend growth rate of 20%. However, the company’s earnings growth is slowing – in fiscal 2022 (which ended March 31, 2022), adjusted EPS grew by 8%, and the company is guiding to between flat and 7% adjusted EPS growth. The company’s payout ratio of 40% leaves room for another double-digit boost, but it’ll be smaller than last year’s 16% increase. Predicted Forward Yield: 1.82 – 1.89%
BlackRock, Inc. (BLK)	13	Asset Management	10.0 – 11.9	$21.48 – $21.84
Asset manager BlackRock has consistently boosted its dividend by double-digit percentages, compounding its dividend at more than 12% over the last decade. That streak may come to an end this year as EPS have fallen 7% year-over-year in the first 9 months of 2022 as the stock market has dropped. The company’s payout ratio of 50% leaves room for another good increase, but investors won’t see anything close to last year’s 18% boost. Predicted Forward Yield: 3.03 – 3.08%
Church & Dwight Co., Inc. (CHD)	26	Household & Personal Products	3.8 – 4.8	$1.09 – $1.10
The owner of popular consumer brands such as Arm & Hammer, Orajel, and Waterpik is expecting sales growth of 3% for 2022. But with inflation moving faster than price increases to the consumer, adjusted EPS is expected to be down 2 – 3%. It’ll be a 5th straight year of 4 – 5 cent annual dividend growth for Church & Dwight. Predicted Forward Yield: 1.35 – 1.36%
California Water Services Group (CWT)	55	Utilities – Regulated Water	4.0 – 5.0	$1.04 – $1.05
The utility company saw EPS drop 26% in the first 9 months of 2022, mostly due to higher debt costs and increased water production costs and administrative expenses. Despite the 9% boost last year, dividend growth will return to earth this year for investors, with an increase around the 4 – 5% long-term growth rate. Predicted Forward Yield: 1.72 – 1.73%
Enterprise Bancorp, Inc. (EBTC)	28	Banks – Regional	7.3 – 9.8	$0.88 – $0.90
After a great 2021, in which EPS grew by more than 30%, Enterprise Bancorp’s business is slowing a bit. With EPS down 4% in the first 9 months of 2022, investors can expect dividend growth to slow from last year’s 11% increase. Predicted Forward Yield: 2.49 – 2.55%
Consolidated Edison, Inc. (ED)	48	Utilities – Regulated Electric	2.5 – 3.8	$3.24 – $3.28
Despite adjusted EPS growth of 10% in the first 9 months of 2022, the New York-based utility sports a heavy debt load and a history of small dividend increases. I believe that Con Ed will boost its dividend around the historical 3% growth rate. Predicted Forward Yield: 3.40 – 3.44%
Fastenal Company (FAST)	23	Industrial Distribution	11.3 – 14.5%	$1.38 – $1.42
The fastener and hardware company was able to pass on rising costs to its customers. With 21% EPS growth in the first 9 months of 2022, Fastenal is poised for another double-digit dividend increase. Predicted Forward Yield: 2.92 – 3.00%
Franklin Electric Co., Inc. (FELE)	30	Specialty Industrial Machinery	10.3 – 12.8	$0.86 – $0.88
The maker of water and fuel pumping systems is guiding to EPS growth of 27% after last year’s 50% increase. With little debt and a modest payout ratio, the company could easily handle a 20%+ dividend boost. Instead, I expect the company to announce an increase similar to last year’s 11% boost. Predicted Forward Yield: 1.08 – 1.10%

Click to enlarge

Summary

Last month, I noted that the theme of December’s increases was “drug makers”; with increases expected from Amgen, Merck, Eli Lilly, Pfizer, and Bristol Myers, health care investors were looking at dividend boosts ranging from the low single digits to mid-double digit percentages. Among the drug makers, Eli Lilly’s 15% increase was notable. In addition to the drug makers, medical device companies Abbott Labs and Stryker came through with nice dividend boosts in the high single digits.

Other notable dividend increases came from tool company Toro Company, credit servicer Mastercard, self storage REIT CubeSmart, tech company Broadcom, and chemical manufacturer Balchem, all of which announced double-digit dividend increases.

Coming up in January will be double-digit increases from multiple companies, including Franklin Electric, Fastenal, and BlackRock. Widely held Kimberly-Clark will keep its long dividend growth streak going, but only barely, as the company struggles with the effects of inflation.

To all of my readers, have a very happy and profitable New Year!