4 Pharmaceutical Companies Among 19 To Announce Annual Dividend Increases In December

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 the middle of November, I provided predictions for 14 dividend growth companies that have historically announced annual payout increases in the second half of November. In this article I’ll look at another 19 dividend growth companies that I expect will announce their annual dividend increases in December.

Here are the results from my predictions from the second half of November (you can see the original predictions here), followed by my predictions for the dividend increases that I’m expecting to be announced in December:

(All yields are based on stock prices at the market close on Friday, November 25th.)

Results for Dividend Increase Announcements from Second Half of November

Agilent Technologies (A) – 12 years of dividend growth

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

Actual: 7.1% increase to $0.90

Forward yield: 0.57%

Dividend growth continues to slow at the medical hardware, software and services company.

American Equity Investment Life Holding Co. (AEL) – 19 years

Prediction: 5.9 – 8.8% increase to $0.36 – $0.38

Actual: 5.9% increase to $0.36

Forward yield: 0.92%

This is the 9th straight year of 2-cent annual dividend growth for the insurance company.

Brown-Forman (BF.B) – 39 years

Prediction: 3.0 – 5.0% increase to $0.777 – $0.792

Actual: 9.0% increase to $0.822

Forward yield: 1.13%

This is one of the largest dividend increases from the spirits and alcohol manufacturer.

CubeSmart (CUBE) – 13 years

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

Actual: Deferred to early December

The REIT will likely announce its annual dividend boost when it announces earnings on December 5th.

Griffon Corporation (GFF) – 11 years

Prediction: 5.6 – 11.1% increase to $0.38 – $0.40

Actual: 11.1% increase to $0.40

Forward yield: 1.08%

Griffon continues its pattern of 2 – 4 cent annual increases after announcing a $2.00 special dividend in July.

(Note: The forward yield above does not include the special dividend.)

HP Inc. (HPQ) – 13 years

Prediction: 8.0 – 14.0% increase to $1.08 – $1.14

Actual: 5.0% increase to $1.05

Forward yield: 3.64%

With flat EPS for the full year, the technology company pulled back on its usual dividend growth rate.

Hormel Foods Corporation (HRL) – 56 years

Prediction: 5.8 – 9.6% increase to $1.10 – $1.14

Actual: 5.8% increase to $1.10

Forward yield: 2.13%

This is the 2nd straight year of 6% dividend growth for the food company.

Matthews International Corporation (MATW) – 27 years

Prediction: 4.5 – 9.1% increase to $0.92 – $0.96

Actual: 4.5% increase to $0.92

Forward yield: 2.93%

This is the industrial conglomerate’s 5th straight year of annual dividend growth of either 4 or 8 cents.

MDU Resources Group, Inc. (MDU) – 31 years

Prediction: 2.3% increase to $0.89

Actual: 2.3% increase to $0.89

Forward yield: 2.83%

It’s the 13th straight year of 2-cent annual dividend growth for the natural gas utility.

McCormick & Company (MKC) – 23 years

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

Actual: Deferred to early December

The flavoring and spices company should announce its annual dividend boost in early December.

Merck & Co. (MRK) – 12 years

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

Actual: Deferred to early December

Merck should announce its annual increase in early December.

Motorola Solutions (MSI) – 11 years

Prediction: 9.5 – 11.4% increase to $3.46 – $3.52

Actual: 11.4% increase to $3.52

Forward yield: 1.31%

The communications company’s dividend growth is right in line with its adjusted EPS growth for the year.

Nike, Inc. (NKE) – 21 years

Prediction: 9.8 – 14.8% increase to $1.34 – $1.40

Actual: 11.5% increase to $1.36

Forward yield: 1.28%

This year’s dividend growth from Nike is right at the company’s 5-year compounded growth rate.

RGC Resources (RGCO) – 22 years

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

Actual: Deferred to early December

This small-cap natural gas utility should announce its next annual dividend increase in December.

Royal Gold (RGLD) – 20 years

Prediction: 11.4 – 14.3% increase to $1.56 – $1.60

Actual: 7.1% increase to $1.50

Forward yield: 1.38%

The precious metals producer’s dividend growth rate slowed from its usual 10%+ rate this year.

Spire Inc. (SR) – 19 years

Prediction: 3.6 – 5.1% increase to $2.84 – $2.88

Actual: 5.1% increase to $2.88

Forward yield: 3.86%

The natural gas utility’s 5% increase this year is consistent with the company’s long-term growth rate.

The York Water Company (YORW) – 25 years

Prediction: 4.0 – 6.0% increase to $0.8108 – $0.8264

Actual: 4.0% increase to $0.8108

Forward yield: 1.76%

York Water begins its 2nd quarter century of dividend growth with another mid-single digit increase.

Predictions for Dividend Increases for December

There are 19 companies I expect to announce their annual dividend increases in December. First, here are my predictions for three featured companies:

Broadcom Inc. (AVGO) – 13 years of dividend growth

Technology company Broadcom designs, develops and supplies a variety of semiconductor components, including storage systems, optical equipment, wired and wireless equipment, as well as mainframe and enterprise software. The company has very rapid revenue and earnings growth, posting 26% adjusted EPS growth in 2021 and following up with another 25% growth in the first 9 months of 2022. Past earnings growth has enabled Broadcom to post compounded dividend growth of more than 40% over the last decade.

As with most companies, dividend growth slows as the company grows and this is true of Broadcom as well. Last year’s 14% boost, while still impressive, was one of the smallest increases for Broadcom in the last decade.

So what can investors expect this year? The company has a decent amount of debt and a payout ratio around 60%. Given that Broadcom’s EPS growth is roughly what it was last year, I expect that this year’s boost will be at the same level – around 14%.

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

Predicted Forward Yield: 3.45 – 3.52%

Bristol Myers Squibb Company (BMY) – 16 years

The first drug maker that I’ll look at this month is Bristol Myers Squibb. The company has a portfolio of at least 18 drugs for which it reports revenues. The top 3 drugs are Eliquis, which treats blood clots, and anti-cancer drugs Revlimid and Opdivo. Included in the 18 drugs individually called out in its earnings reports are 9 drugs that are part of the new product portfolio. While those drugs still have annual revenues below $1 billion, Bristol Myers’ drug portfolio is healthy. The company is currently guiding to adjusted EPS growth between 0 and 3% for 2022 as the new drugs gain acceptance. Bristol Myers also has a payout ratio below 30%, leaving plenty of room for another dividend increase. With the modest EPS growth, investors won’t see another increase like last year’s 10% boost, but can expect a mid-to-high single digit increase.

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

Predicted Forward Yield: 2.86 – 2.98%

Pfizer Inc. (PFE) – 12 years

The second drug maker scheduled to announce its annual dividend increase is New York-based Pfizer. After nearly doubling adjusted EPS in 2021, the company is guiding to a further 45% growth in 2022. The 2021 growth was driven by Pfizer’s COVID-19 vaccine Comirnaty, blood clot drug Eliquis, and anti-cancer drugs Ruxience, Zirabev, and Trazimera. 2022’s earnings growth is coming from Comirnaty and the COVID-19 treatment Paxlovid. In addition, Pfizer recently completed the acquisitions of Biohaven and Global Blood Therapeutics, which led the company to raise its full year earnings guidance.

Pfizer sports a modest debt level and payout ratio, and is could announce a double-digit increase. However, over the last 13 years, Pfizer’s dividend growth has been modest, with 11 years of 8-cent increases followed by 2 years of 4-cent increases, which has given the company a decade long compounded dividend growth rate of 6.5%. Although the possibility exists for a larger boost, I expect the company to stick with a pattern of mid-single digit boosts.

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

Predicted Forward Yield: 3.37 – 3.49%

Here are my predictions for the 16 other companies which should announce annual increases in the second half of November:

Company	# Yrs	Industry	Prediction (%)	New Annual Rate
Abbott Laboratories (ABT)	50	Medical Devices	3.2% – 5.9%	$1.94 – $1.98
Adjusted EPS exploded by 43% in fiscal 2021 due to the massive demand for Abbott’s COVID-19 testing kits, but as demand slows earnings are leveling off. Abbott is guiding to flat EPS growth in 2022. Investors can expect a dividend boost like last year’s 4% increase, well below the 5-year average of 12%. Predicted Forward Yield: 1.83 – 1.87%
Amgen Inc. (AMGN)	11	Drug Manufacturers – General	5.7% – 8.8%	$8.20 – $8.44
In addition to regular 10%+ dividend growth, the biotechnology company has had sufficient free cash flow to buy back 22% of its outstanding shares over the last 5 years. Will Amgen keep up the pattern? Revenues fell by 1%, as reduced prices offset sales volume growth. The company has a heavy debt load and, despite a payout ratio of 40%, I expect dividend growth to slow from last year’s 10% increase. Predicted Forward Yield: 2.89 – 2.98%
Balchem Corporation (BCPC)	12	Specialty Chemicals	10.9% – 14.1%	$0.71 – $0.73
Specialty chemical company Balchem Corporation focuses on the nutrition markets, for both humans and animals. The company pays out dividends annually and generally announces double-digit boosts. Investors can look forward to another 10%+ year of dividend growth as the company grew adjusted EPS by 13% in the first 9 months of 2022, powered by 20% sales growth and the acquisition of Bergstom Nutrition. Predicted Forward Yield: 0.50 – 0.51%
Franklin Resources, Inc. (BEN)	42	Asset Management	3.40%	$1.20
The investment manager’s EPS fell with the drop in the stock market. Franklin Resources has increased its quarterly dividend by a single penny in each of the last 3 years. With the 29% drop in EPS, investors can expect another year of the same. Predicted Forward Yield: 4.60%
Ecolab Inc. (ECL)	30	Specialty Chemicals	2.0% – 3.9%	$2.08 – $2.12
After two years of 4-cent annual increases, Ecolab’s earnings grew quickly enough to let the company announce a 12-cent boost – corresponding to a 6% dividend increase. EPS were up 17% in 2021, but are flat over the first 9 months of 2022. I expect this to result in a smaller increase than last year. Predicted Forward Yield: 1.40 – 1.42%
Eastman Chemical Company (EMN)	13	Chemicals	7.9% – 9.9%	$3.28 – $3.34
The specialty chemical company rewarded investors with a 10% boost last year, as it was on its way to adjusted EPS growth of 44% in 2021. Eastman Chemical is expecting adjusted EPS to fall in 2022, with free cash flow being flat to slightly higher year-over-year. Given the drop in EPS, investors can expect dividend growth to slow a bit, but the company should be able to come through with a boost in the high single digits. Predicted Forward Yield: 3.77 – 3.84%
Graco Inc.	25	Specialty Industrial Machinery	11.9% – 16.7%	$0.94 – $0.98
With a decade-long dividend growth rate of 13%, specialty machinery company Graco has routinely boosted its dividend by double digits. Investors can expect another good year of dividend growth. The company grew adjusted EPS by 25% in 2021 and is tracking to 7% EPS growth year-over-year for the first 9 months of 2022. Look for an increase in line with the long-term dividend growth rate. Predicted Forward Yield: 1.34 – 1.40%
Eli Lilly and Company (LLY)	9	Drug Manufacturers – General	6.1% – 8.2%	$4.16 – $4.24
The 4th major drug company that’s expected to announce its annual dividend increase this month, Eli Lilly has lowered its earnings guidance throughout 2022. After growing EPS by 20% in 2021, the company is now expecting EPS to fall by about 5% in 2022. While burdened with heavy debt, the company still has a payout ratio around 50%, leaving it room for another boost – just not one as large as last year’s 15% increase. Expect an announcement around the long-term growth rate of 6 – 7%. Predicted Forward Yield: 1.14 – 1.16%
Mastercard Incorporated (MA)	11	Credit Services	17.3% – 22.4%	$2.30 – $2.40
Despite a heavy debt load, the credit servicer continues to quickly grow its payout. After EPS fell from 2019 to 2020, Mastercard still boosted its dividend by 11%. With 2021 EPS coming in 30% higher than 2020’s EPS, investors can look forward to an increase around the 5-year growth rate of 18%. Predicted Forward Yield: 0.66 – 0.68%
Nucor Corporation (NUE)	49	Steel	12.0% – 20.0%	$2.24 – $2.40
After years of small dividend increases, the steel manufacturer surprised investors with a massive 23% increase last year, driven by a nearly 10-fold increase in EPS. Nucor is looking at more than 50% year-over-year EPS growth in the first 3 quarters of 2022; this should support another double-digit increase. Predicted Forward Yield: 1.50 – 1.61%
Pentair plc (PNR)	46	Specialty Industrial Machinery	4.8% – 7.1%	$0.88 – $0.90
Slow and steady wins the race for Pentair investors. The water pump and filtration company generally boosts its dividend by 4 – 6 cents annually. The company is guiding to 7% EPS growth in 2022, which will support another 4 – 6 cent increase. Predicted Forward Yield: 1.90 – 1.95%
SEI Investments Company (SEIC)	31	Asset Management	7.5% – 10.0%	$0.86 – $0.88
After growing EPS by 27% in 2021, earnings are down slightly in the first three quarters for investment manager SEI due to additional costs from a voluntary separation program and the drop in the market. But with zero debt and a payout ratio below 25%, investors can look forward to another dividend increase in the high single digits. Predicted Forward Yield: 1.37 – 1.41%
Stryker Corporation (SYK)	29	Medical Devices	5.0% – 7.2%	$2.92 – $2.98
Medical device manufacturer Stryker has a decade-long dividend growth rate of 12%. The company posted EPS growth of 22% in 2021, but has been lowering its earnings outlook throughout 2022 and is now projecting EPS growth of only 1% for the year. I expect this to result in a deceleration of dividend growth from last year’s 10% boost. Predicted Forward Yield: 1.25 – 1.28%
The Hanover Insurance Group (THG)	18	Insurance – Property & Casualty	6.70%	$3.20
Hanover Insurance Group is the holding company for roughly 17 insurance companies, including Citizens Insurance companies. The company has routinely boosted its annual dividend by 20 cents and periodically issues a special dividend. In addition, the company has bought back more than 15% of its outstanding shares over the last 5 years. I expect the company to continue this pattern of 20 cent annual dividend increases, as the company’s earnings growth can support this. Predicted Forward Yield: 2.17%
The Toro Company (TTC)	19	Tools & Accessories	11.7% – 15.0%	$1.34 – $1.38
Powered by double-digit sales growth in its Professional business segment, the landscape and construction company is projecting adjusted EPS growth of 14% for 2022. This follows 19% growth in 2021. The projected growth should drive a dividend increase in the low double-digits. Predicted Forward Yield: 1.20 – 1.24%
WEC Energy Group (WEC)	19	Utilities – Regulated Electric	5.8% – 7.2%	$3.08 – $3.12
Serving the midwestern United States, WEC Energy targets a dividend payout between 65 and 70% of earnings. The current payout of $2.91 is roughly 71% of 2021’s EPS of $4.11. Over the first three quarters of 2022, EPS are up 7.4%, meaning investors can expect a dividend increase of 6 – 7%. Predicted Forward Yield: 3.12 – 3.16%

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Summary

Investors were rewarded with double-digit boosts from several companies in the second half of November. Multinational conglomerate Griffon, communications company Motorola Solutions, and footwear company Nike all announced 10%+ boosts to their annual dividends. Also coming in with notable increases was spirit manufacturer Brown-Forman who beat my expectations with a 9% increase.

In December, investors will be able to focus on several drugmakers that are expected to announce dividend increases. We’re still waiting for Merck to announce its increase; joining Merck will be Amgen, Eli Lilly, Pfizer, and Bristol Myers Squibb. While none of them are expected to announce particularly large increases, there are several other companies that will – specifically, Broadcom, Mastercard and Balchem Corp should continue their pattern of 10%+ increases, along with machinery company Graco, steel company Nucor, and tool company Toro. Fans of investment managers can look forward to announcements from Franklin Resources and SEI Investments. Finally, Abbott Labs should begin its second half century of dividend growth with an announcement in December.