Dividend Growth Predictions For 15 Companies Announcing Annual Boosts In October


Pharmaceutical company AbbVie should announce its next annual dividend increase in October. The company has increased its dividend each year since its spin-off from Abbott Labs.


This is the latest in my series of articles where I provide

Company # Yrs Industry Prediction (%) New Annual Rate
A. O. Smith Corporation (AOS) 30 Industrials – Specialized Industrial Machinery 10.0 – 13.3% $1.32 – $1.36
In spite of potential slowdowns in China and the U.S., the manufacturer of boilers and hot water heaters is seeing strong demand from both markets. That, along with lower costs for steel inputs compared with last year, has A. O. Smith increasing full year adjusted EPS growth guidance to between 10% and 15%. This should allow the company to return to double-digit growth after last year’s 7% increase. Predicted Forward Yield: 2.00 – 2.06%
Amphenol Corporation (APH) 12 Technology – Electronic Components 4.8 – 9.5% $0.88 – $0.92
The designer and manufacturer of electrical cables, sensors, and antenna has built an envious dividend growth record, compounding its payout by nearly 26% over the last decade. But last year’s boost of 5% was much lower than the growth rate would have predicted. And while 2022’s EPS growth rate of more than 20% would cause investors to expect Amphenol to return to its usual dividend growth rate, 2023 is a different story as the economic slowdown takes its toll. EPS growth has disappeared in the first half of 2023 – meaning that investors will probably see another year of below-average dividend growth. Predicted Forward Yield: 1.05 – 1.10%
Brown & Brown, Inc. (BRO) 29 Financial – Insurance Brokers 8.7 – 13.0% $0.50 – $0.52
Run well, insurance businesses are cash flow machines and investors are benefitting from Brown & Brown’s group of businesses. The company has consistently grown its dividend in the high single digit percentages and rewarded investors with a 12% boost last year. With 6% full-year EPS growth in 2022 and another 19% in the first half of 2023, the company is poised for another year of 10% dividend growth. Predicted Forward Yield: 0.72 – 0.74%
The Gorman-Rupp Company (GRC) 17 Industrials – Specialized Industrial Machinery 2.9 – 5.7% $0.72 – $0.74
The designer and manufacturer of pumps and pump systems saw rough waters last year, as it digested the acquisition of niche pump manufacturer Fill-Rite. Gorman-Rupp took on new debt to finance the purchase and the interest expense helped drive adjusted EPS down by 22% in 2022. Earnings are rebounding so far in 2023, but the company is likely to hold off on accelerating its dividend growth until some of that new debt is paid down. Look for a boost in the mid-single digits, below the long-term dividend growth record of 8%. Predicted Forward Yield: 2.19 – 2.25%
Lincoln Electric Holdings, Inc. (LECO) 28 Industrials – Tools & Accessories 13.3 – 17.2% $2.90 – $3.00
Lincoln Electric specializes in arc welding systems for a variety of industries. In addition to growing its dividend for more than a quarter century, the company also uses its free cash flow for share repurchases – Lincoln Electric has bought back nearly 10% of its outstanding shares since 2018. EPS growth was fantastic in 2022 – the 75% EPS growth powered by the ability of the company to pass along inflating costs to its customers. While much slower, the growth is continuing into 2023 with year-over-year EPS up 6%. Powered by last year’s massive earnings jump, investors can look forward to another year of payout growth in the mid-teens, consistent with Lincoln Electric’s long term dividend growth rate. Predicted Forward Yield: 1.60 – 1.65%
Middlesex Water Company (MSEX) 50 Utilities – Regulated Water 7.2 – 8.8% $1.34 – $1.36
The New Jersey-based utility has been accelerating its dividend growth in recent years, peaking with an 8% boost last year. And while EPS are flat year-over-year in the first half of 2023, the 15% EPS growth for the full year of 2022 will encourage Middlesex Water to keep the fast dividend growth going. Investors can expect another high single digit boost in late October. Predicted Forward Yield: 2.02 – 2.05%
Northwest Natural Holding Company (NWN) 67 Utilities – Regulated Gas 0.5 – 1.0% $1.95 – $1.96
Although net income was up 10% in 2022, it was more than offset by an increase in the outstanding shares. There’s not much to say here – the natural gas utility has recorded 8 years of annual dividend growth of 1 penny. With a payout ratio north of 75% and zero EPS growth, the company will continue to do the minimum amount to keep the dividend growth streak going into its 68th year. Predicted Forward Yield: 5.11 – 5.14%
Prosperity Bancshares, Inc. (PB) 25 Financial – Regional Banks 3.6 – 5.5% $2.28 – $2.32
Texas-based Prosperity Bancshares benefitted from the favorable energy exploration policies during the Trump presidency. Dividend growth has leveled off over the last three years, with annual increases of 12 cents per share. Still, this translates into 6% annual dividend growth since 2020. Earnings growth continues to encounter headwinds – EPS grew only 2.3% in 2022 and, so far in 2023 is down more than 15%. Still, even with the drop in EPS, Prosperity sports a payout ratio of less than 50% – giving it enough room for a small increase this year. Predicted Forward Yield: 4.18 – 4.25%
RPM International Inc. (RPM) 49 Materials – Specialty Chemicals 4.8 – 7.1% $1.76 – $1.80
The specialty chemical company manufactures many products used in construction and is benefiting from companies moving manufacturing plants back to the United States. RPM recently reported 17% adjusted EPS growth on 8% sales growth, and expects a good fiscal 2024. While the EPS growth could support a double-digit boost, I think it’s more likely that the company will stick with a mid-single digit increase – similar to the last 3 years. Predicted Forward Yield: 1.86 – 1.90%
Stepan Company (SCL) 55 Materials – Specialty Chemicals 2.7 – 5.5% $1.50 – $1.54
Lower demand for Stepan’s specialty chemicals are impacting earnings. With sales down 17% in the first half of 2023 and expenses up, operating income fell a minimum of 45% across all business segments. Unless business improves dramatically, the company is looking at its payout ratio jumping from 21% to more than 70%. I expect Stepan to pull back on its dividend growth until sales and income improve. Predicted Forward Yield: 2.00 – 2.05%
Standex International Corporation (SXI) 13 Industrials – Specialized Industrial Machinery 8.9 – 14.3% $1.22 – $1.28
The diversified manufacturer is benefitting from investments in renewable energy, electric vehicles, and the commercialization of space. The company has taken advantage of the consistent free cash flow by buying back 4% of its outstanding shares and compounding its payout by 10% over the last 5 years. With a 70% growth in EPS in 2022, and another 115% increase in the first 3 quarters of 2023, investors can expect dividend growth to accelerate from last year’s 8% boost. Predicted Forward Yield: 0.84 – 0.88%
Tompkins Financial Corporation (TMP) 20 Financial – Regional Banks 3.3 – 5.0% $2.48 – $2.52
This small-cap banking and financial services company is dealing with the same issues afflicting the banking industry – net losses on investments in Treasuries along with headwinds affecting the economy. The company has consistently grown its dividend in the 4 – 5% range and, while Tompkins is looking at an EPS drop of nearly 40% so far in 2023, the company should be able to manage another year of dividend growth as it waits for business prospects to improve. Predicted Forward Yield: 5.06 – 5.14%
Waste Connections, Inc. (WCN) 13 Industrials – Waste Management 11.8 – 17.6% $1.14 – $1.20
The Canadian solid waste services company has an outstanding dividend growth record, with 14% compounded growth over the last decade. 2022 was another good year for Waste Connections, with revenues up 17% and adjusted EPS up 18%. While 2023’s first half growth rate of 5% may mean lower growth in the future, investors can expect at least one more year of double-digit dividend growth. Predicted Forward Yield: 0.85 – 0.89%

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