3 Dividend Kings Among 22 To Announce Annual Dividend Increase In H1 Of February

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 December, I provided predictions for 13 dividend growth companies that have historically announced annual payout increases in January. In this article, I’ll review those dividend increases and take a look at another 22 dividend growth companies that I expect will announce their annual dividend increases in the first half of February.

Before I get to that, there were three other long-term dividend growth companies that announced its annual increase in January:

– Waste Management (WM) announced a 7.7% dividend increase to an annualized $2.80. This is the 20th year of dividend growth for the trash and recycling company, and gives the company a forward yield of 1.83%.

– Energy mega-cap company Chevron (CVX) announced its 36th year of dividend growth with a 6.3% boost to an annualized $6.04. This latest increase gives the company a forward yield of 3.37%.

– Regional bank S&T Bancorp (STBA) extended its dividend growth streak to 11 years. The company’s new annual dividend rate is $1.28, a 3.2% increase over last quarter and a 10.3% dividend increase from the same period in 2022. S&T Bancorp’s forward yield is now 3.63%.

Here are the results from my predictions from January (as always, the original predictions are available here), followed by my predictions for the dividend increases that I’m expecting to be announced in the first half of February:

(All yields are based on stock prices at the market close on Friday, January 27th.)

Results for Dividend Increases from January

Archer-Daniels-Midland Company (ADM) – 48 years of dividend growth

Prediction: 7.5 – 12.5% increase to $1.72 – $1.80

Actual: 12.5% increase to $1.80

Forward yield: 2.15%

Powered by 45% EPS growth in 2021 and then followed up by 28% EPS growth in 2022, Archer-Daniels-Midland rewarded investors with a good, larger-than-usual double-digit boost.

Air Products and Chemicals (APD) – 41 years

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

Actual: 8.0% increase to $7.00

Forward yield: 2.33%

Although adjusted EPS growth was up 15% in fiscal 2022, the industrial gases company hedged a bit on its latest dividend increase, with a boost below the company’s 10% average growth rate.

Apogee Enterprises, Inc. (APOG) – 12 years

Prediction: 9.1 – 11.4% increase to $0.96 – $0.98

Actual: 9.1% increase to $0.96

Forward yield: 2.13%

The architectural services firm continued its history of dividend growth in the 9 – 10% range.

Booz Allen Hamilton Holding Corporation (BAH) – 11 years

Prediction: 10.5 – 15.1% increase to $1.90 – $1.98

Actual: 9.3% increase to $1.88

Forward yield: 2.03%

The defense consulting company begins its 2nd decade of dividend growth with a below-average increase.

BlackRock, Inc. (BLK) – 14 years

Prediction: 10.0 – 11.9% increase to $21.48 – $21.84

Actual: 2.5% increase to $20.00

Forward yield: 2.63%

With the drop in the stock market, earnings fell at the investment manager resulting in one of the smallest increases in its history.

Church & Dwight Co., Inc. (CHD) – 26 years

Prediction: 3.8 – 4.8% increase to $1.09 – $1.10

Actual: Deferred to early February

The owner of consumer brands including Arm & Hammer baking soda should announce its latest increase a day or two before it releases full year earnings on February 3rd.

Cincinnati Financial Corporation (CINF) – 62 years

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

Actual: 8.7% increase to $3.00

Forward yield: 2.85%

While the insurer’s increase this year was smaller than last year’s boost, the 8.7% increase is above the company’s long-term average.

California Water Services Group (CWT) – 56 years

Prediction: 4.0 – 5.0% increase to $1.04 – $1.05

Actual: 4.0% increase to $1.04

Forward yield: 1.68%

The water utility’s latest dividend increase is consistent with the company’s long-term growth rate.

Enterprise Bancorp, Inc. (EBTC) – 30 years

Prediction: 7.3 – 9.8% increase to $0.88 – $0.90

Actual: 12.2% increase to $0.92

Forward yield: 2.68%

Dividend growth is accelerating at the regional banking company, with this year’s increase larger than last year’s 11% boost.

Consolidated Edison, Inc. (ED) – 49 years

Prediction: 2.5 – 3.8% increase to $3.24 – $3.28

Actual: 2.5% increase to $3.24

Forward yield: 3.41%

The New York-based utility continued its pattern of 2 – 3% dividend growth.

Fastenal Company (FAST) – 24 years

Prediction: 11.3 – 14.5% increase to $1.38 – $1.42

Actual: 12.9% increase to $1.40

Forward yield: 2.79%

The fastener and hardware company continued its pattern of double-digit dividend increases.

Franklin Electric Co., Inc. (FELE) – 31 years

Prediction: 10.3 – 12.8% increase to $0.86 – $0.88

Actual: 15.4% increase to $0.90

Forward yield: 1.03%

Dividend growth at the pumping systems manufacturer accelerated from last year.

Kimberly-Clark Corporation (KMB) – 51 years

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

Actual: 1.7% increase to $4.72

Forward yield: 3.66%

Earnings continue to drop at the consumer products company resulting in small dividend increases.

Predictions for Dividend Increases for the First Half of February

There are 22 companies I expect to announce their annual dividend increases in the first half of February. First, here are my predictions for three featured companies – all of which are Dividend Kings with at least 50 years of continuous dividend growth:

Genuine Parts Company (GPC) – 66 years

Genuine Parts, a provider of replacement automotive and industrial parts worldwide, has one of the longest dividend growth rates of all publicly traded companies. Despite its size – the company has a market cap of $23B and is a member of the S&P 500 – Genuine Parts continues to post good EPS growth numbers. After posting EPS growth of 31% in 2021, the company raised its guidance for 2022 and is now expecting growth of more than 17%.

The company focuses on internal investments and returning capital to shareholders in the form of dividends rather than share buybacks. Genuine Parts has a decade-long dividend growth rate of 6%, but rewarded investors with a 10% boost last year. Although the company has a decent debt load, its payout ratio is around 50%, leaving room for another increase around 10% this year.

Prediction: 8.9 – 11.7% increase to $3.90 – $4.00

Predicted Forward Yield: 2.35 – 2.41%

3M Company (MMM) – 64 years

Another large company with a long history of dividend growth, 3M’s fortunes are not going as well as Genuine Parts’. Despite 14% adjusted EPS growth in FY2021, 3M boosted its dividend by less than 1% last year. The company is now guiding its FY2022 adjusted EPS growth to only 1 – 2% after lowering the guidance from earlier in the year.

The company’s issues stem from continued inflation and supply chain problems, along with effects from the war in Ukraine and the impacts of COVID in China. In response to the slowed growth, 3M sold off its food safety business and is working to segregate its health care business to focus the 3M on its legacy businesses.

Whether 3M’s moves to increase its growth work depends on the quality of their management, but it will take time to show up on the company’s balance sheet. 3M will continue its dividend growth streak, but investors will likely see another minimal boost.

Prediction: 0.7 – 1.3% increase to $6.00 – $6.04

Predicted Forward Yield: 5.21 – 5.24%

PepsiCo, Inc. (PEP) – 50 years

Soft drink and snack company PepsiCo has a very consistent dividend growth record, with annual increases in the 6 – 8% range. Conveniently, the company is guiding adjusted EPS growth for 2022 to 7.5%. The company’s growth is being led by revenue growth of at least 14% in its Latin America, Frito-Lay North America, and Quaker Foods North America business segments in the first 3 quarters of 2022. Interestingly, these revenue gains are not joined by volume growth, implying that PepsiCo is able to pass along price increases to the consumer.

For the full year, the company recently raised its guidance for organic revenue growth to 12% and constant currency EPS growth of 10%. The latter is reduced by 2.5 percentage points due to currency effects, giving the 7.5% EPS growth mentioned earlier.

PepsiCo’s ability to continue to grow its revenues and earnings in an inflationary environment is impressive and supports another dividend boost in the 7% range.

Prediction: 6.5 – 7.8% increase to $4.90 – $4.96

Predicted Forward Yield: 2.89 – 2.92%

And here are my predictions for the 19 other companies which should announce annual increases in the first half of February:

Company	# Yrs	Industry	Prediction (%)	New Annual Rate
Analog Devices (ADI)	20	Semiconductors	9.9 – 11.8%	$3.34 – $3.40
Semiconductor company Analog Devices is showing good growth in its industrial, automotive and communications markets, driving adjusted EPS growth of nearly 50%. The company has built a consistent dividend growth record; investors can look forward to another 10% boost. Forward Yield: 1.96% – 1.99%
Allegion plc (ALLE)	9	Security & Protection Services	3.7 – 6.1%	$1.70 – $1.74
The security company has consistently boosted its dividend by double-digits, but this year may be the exception. Adjusted EPS grew by less than 2% in 2021 and Allegion is guiding to adjusted EPS growth of 5% in 2022, despite expecting revenue growth of 10%. The only reason that the company would continue its 10%+ increases is the current payout ratio of 30%, assuming the earnings guidance is accurate. I expect the company to pull back on its dividend increase into the mid-single digits. Forward Yield: 1.49% – 1.52%
Avista Corporation (AVA)	20	Utilities – Diversified	2.3 – 4.0%	$1.80 – $1.83
The energy producer and distributor serving the Northwestern United States lowered its EPS guidance by 2.5% for 2022 and by 6% for 2023. Investors can expect Avista’s dividend increase to come in below its 4% average growth rate. Forward Yield: 4.50% – 4.58%
Cisco Systems (CSCO)	12	Communications Equipment	2.6 – 3.9%	$1.56 – $1.58
Networking hardware designer and manufacturer Cisco Systems saw adjusted EPS grow by 4% in FY22 and is looking at another 5 – 6% growth in FY23. The company has focused on buying back shares, retiring nearly 14% of outstanding shares since 2017. Since Cisco is looking at modest EPS growth, I expect another year of slow dividend growth following last year’s 3% boost. Forward Yield: 3.22% – 3.26%
Quest Diagnostics Inc. (DGX)	12	Diagnostics & Research	6.1 – 7.6%	$2.80 – $2.84
With revenues from COVID-19 testing down more than 50%, Quest Diagnostics is guiding to a 30% drop in EPS. Even with the drop, the company has a payout ratio of 25%, leaving room for another boost in the 6 – 7% range. Forward Yield: 1.92% – 1.95%
Eversource Energy (ES)	24	Utilities – Regulated Electric	5.9 – 7.1%	$2.70 – $2.73
Utility Eversource recently reaffirmed its long-term growth objective of 5 – 7%, which is consistent with its dividend growth rate over the last decade. The company is projecting a 15% EPS in 2022, which more than makes up for flat EPS in 2021. Investors will enjoy another 6 – 7% dividend boost this year. Forward Yield: 3.34% – 3.37%
Exponent, Inc. (EXPO)	10	Consulting Services	12.5 – 18.8%	$1.08 – $1.14
The engineering and scientific consulting firm is looking at flat to slightly lower EPS in 2022. Exponent has built a remarkable dividend growth rate of 18% over the last 5 years, capped off with a 20% boost last year. At some point, dividend growth will slow dramatically but I don’t think it’ll be this year. Forward Yield: 1.07% – 1.13%
Corning Incorporated (GLW)	12	Electronic Components	5.6 – 9.3%	$1.14 – $1.18
Demand for glass panels fell in 2022, driving Corning’s core EPS guidance down 20% to between $1.62 and $1.68. Given the caution the company is showing by waiting for business to rebound, I expect the company’s dividend boost to be in the mid-to-high single digits – about half of Corning’s long-term growth rate. Forward Yield: 3.10% – 3.21%
ITT Inc. (ITT)	10	Specialty Industrial Machinery	13.6 – 17.4%	$1.20 – $1.24
The specialty industrial machinery company has consistently boosted its dividend by 10%+ annually. The company has little debt, a payout ratio below 30%, and is expecting to announce FY22 adjusted EPS growth of nearly 9%. Investors won’t see another 20% boost like last year but can still expect an increase in the mid-teens. Forward Yield: 1.31% – 1.36%
Jack Henry & Associates, Inc. (JKHY)	32	Information Technology Services	5.1 – 7.1%	$2.06 – $2.10
Jack Henry provides technology solutions to financial companies. After growing EPS by 20% in FY22 (which ended June 30, 2022), the company has lowered its guidance for FY23 and is currently expecting zero EPS growth year-over-year. Watch for another boost in the mid-single digits, like last year’s. Forward Yield: 1.14% – 1.16%
Moody’s Corporation (MCO)	13	Financial Data & Stock Exchanges	7.9 – 10.7%	$3.02 – $3.10
Moody’s business is divided into two segments: Moody’s Investors Service and Moody’s Analytics. Moody’s Investors Service revenues and earnings are suffering in the current fiscal year due to lower debt issuance globally as the markets became volatile and interest rates rise worldwide. This is driving expectations of adjusted EPS down by 21 – 25%. While Moody’s has an excellent dividend growth rate of around 18%, the company will be hard pressed to meet that bar. Forward Yield: 0.94% – 0.97%
NextEra Energy, Inc. (NEE)	28	Utilities – Regulated Electric	9.4 – 11.8%	$1.86 – $1.90
The Florida-based utility recently extended its expected EPS growth rate of 6 – 8% through 2025 and noted that it expects to grow dividends at approximately 10% through at least 2024. The company’s expecting 12% growth in adjusted EPS in 2022, which more than supports NextEra’s goals. Forward Yield: 2.46% – 2.51%
NorthWestern Corporation (NWE)	18	Utilities – Diversified	0.8 – 1.6%	$2.54 – $2.56
Between reduced commercial demand and higher interest rates, the Montana and South Dakota-based utility saw EPS fall 20%. It’ll be yet another year of minimal dividend growth for NorthWestern. Forward Yield: 4.48% – 4.51%
Public Service Enterprise Group Incorporated (PEG)	11	Utilities – Diversified	2.8 – 4.6%	$2.22 – $2.26
Utility PSEG serves northern New Jersey and Long Island. Like NorthWestern above, PSEG is guiding 2022 EPS downward year-over-year. Unlike NorthWestern, the EPS drop is significantly smaller – 5.5%. PSEG investors will see another dividend boost, smaller than last year’s 6% increase and likely around the company’s 4% long-term growth rate. Forward Yield: 3.66% – 3.73%
Prudential Financial, Inc. (PRU)	14	Insurance – Life	4.2 – 5.8%	$5.00 – $5.08
With the market down in the first half of the year, the insurer took a hit on earnings due to lower investment gains and investment management fees. Expect another increase like last year’s 4% boost. Forward Yield: 4.83% – 4.91%
The Sherwin-Williams Company (SHW)	44	Specialty Chemicals	5.0 – 8.3%	2.52 – $2.60
With a heavy debt load and an inflationary environment, the paint and coatings company has multiple headwinds to keep its 16% compounded dividend growth rate going. But with expectations of 6% EPS growth after flat earnings in 2021, investors can expect a 45th year of dividend growth from Sherwin-Williams. Forward Yield: 1.10% – 1.14%
T. Rowe Price Group (TROW)	36	Asset Management	5.0 – 6.3%	$5.04 – $5.10
The bear market drove assets under management dramatically down for the investment manager, resulting in a 35% drop in adjusted EPS. The company won’t be able to match last year’s 11% dividend increase but will likely reward investors with a mid-single digit dividend boost. Forward Yield: 4.33% – 4.39%
United Parcel Service, Inc. (UPS)	13	Integrated Freight & Logistics	7.9 – 9.2%	$6.56 – $6.64
The cargo company is tracking to grow EPS by 6 – 7% over last year’s numbers. With a payout ratio around 50%, there’s room for another year of dividend growth but investors won’t see anything close to last year’s surprise 49% boost. Forward Yield: 3.60% – 3.65%
Xylem Inc. (XYL)	11	Specialty Industrial Machinery	6.7 – 10.0%	$1.28 – $1.32
Dividend growth from the water technology development company has slowed, with 8-cent annual boosts in each of the last 3 years. With adjusted EPS growth of 21% in 2021 followed by an expectation of 8% in 2022, we might see a break from this pattern. I think there’s a possibility of a slightly larger boost this year. Forward Yield: 1.25% – 1.29%

Click to enlarge

Summary

January brought some very nice dividend increases, along with some disappointing boosts from companies that are dealing with slow earnings growth. In the latter category are consumer products company Kimberly-Clark and utility Consolidated Edison, with increases below 3%. Also coming in with a disappointing boost was investment manager BlackRock – a result of the fallout from a weak stock market in 2022.

On the other side, investors were rewarded with 10%+ increases from Archer-Daniels-Midland, Fastenal, and Franklin Electric. Regional bank Enterprise Bancorp also rewarded investors with a 12% increase.

While this was a good start to the year, there’s a bow wave of dividend increases coming in February. Several dividend kings – those companies with at least 50 years of dividend growth – will announce their latest increases. Genuine Parts, with 66 years of dividend growth under its belt, should announce a boost around 10%. Trailing right behind them, with 64 years of growth is 3M, which should announce a small increase – enough to keep the streak alive. PepsiCo will begin its second half century of dividend growth with a mid-single digit boost.

Other notable increases in the first two weeks of February include consulting company Exponent, chip manufacturer Analog Devices, and industrial manufacturer ITT, all of which should reward investors with 10%+ boosts.