As it prepares to finalize the acquisition of Hess, Chevron will announce its 37th year of dividend growth in January. Brandon Bell
This is the latest in my series of articles where I provide predictions of annual dividend increases for long-term dividend growth companies. At the end of November, I provided predictions for 18 dividend growth companies that have historically announced annual payout increases in December. In this article I’ll look at another 14 dividend growth companies that I expect will announce their annual dividend increases in January.
Before I get to that, I want to note two other companies with a history of dividend growth that also announced annual dividend increases in December:
– Utility Alliant Energy (LNT) announced a 2024 dividend target of $1.92, a 6.1% increase from 2023’s dividend of $1.81. This makes 2024 the 21st year of dividend growth for Alliant and gives the company a forward yield of 3.74%.
– Owens Corning (OC) extended its dividend growth streak to 11 years with a 15% boost to an annualized rate of $2.40. The building materials company has a forward yield of 1.62%.
Here are the results from my predictions from December (you can see the original predictions here), 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 29th.)
Results for Dividend Increase Announcements from December
Abbott Laboratories (ABT) – 52 years of dividend growth
Prediction: 4.9 – 6.9% increase to $2.14 – $2.18
Actual: 7.8% increase to $2.20
Forward yield: 2.00%
Dividend growth at Abbott slowed from last year but still beat my expectations.
Amgen Inc. (AMGN) – 13 years
Prediction: 9.9 – 11.0% increase to $9.36 – $9.46
Actual: 5.6% increase to $9.00
Forward yield: 3.12%
The biologics company’s latest increase fell far short of its 11% average growth rate over the last 5 years.
Broadcom Inc. (AVGO) – 15 years of dividend growth
Prediction: 14.7 – 17.4% increase to $21.10 – $21.60
Actual: 14.1% increase to $21.00
Forward yield: 1.88%
The semiconductor company continued its history of 10%+ dividend growth.
Balchem Corporation (BCPC) – 14 years
Prediction: 7.0 – 9.9% increase to $0.76 – $0.78
Actual: 11.3% increase to $0.79
Forward yield: 0.53%
Despite flat EPS in 2023, the specialty chemical company’s latest increase was right in line with its 5-year compounded growth rate of 11%.
Franklin Resources, Inc. (BEN) – 44 years
Prediction: 0 – 3.3% increase to $1.20 – $1.24
Actual: 3.3% increase to $1.24
Forward yield: 4.16%
Dividend growth continues to slow at the investment company. This is Franklin Resources’ 2nd year of 3% dividend growth.
Bristol-Myers Squibb Company (BMY) – 18 years
Prediction: 4.4 – 7.0% increase to $2.38 – $2.44
Actual: 5.3% increase to $2.40
Forward yield: 4.68%
As expected, the drug company announced a dividend increase in the mid-single digits.
CubeSmart (CUBE) – 15 years
Prediction: 13.3 – 16.3% increase to $2.22 – $2.28
Actual: 4.1% increase to $2.04
Forward yield: 4.40%
The self-storage REIT’s expected current earnings growth of 6% forced dividend growth to slow, despite last year’s 20% EPS growth.
Ecolab Inc. (ECL) – 32 years
Prediction: 7.5 – 10.4% increase to $2.28 – $2.34
Actual: 7.5% increase to $2.28
Forward yield: 1.15%
As EPS growth returned to Ecolab this year, so did the dividend growth. This year’s increase is an acceleration from last year’s 4% increase.
Eastman Chemical Company (EMN) – 15 years
Prediction: 2.5 – 3.8% increase to $3.24 – $3.28
Actual: 2.5% increase to $3.24
Forward yield: 3.61%
With EPS growth near zero, dividend growth is minimal for Eastman Chemical.
Graco Inc. (GGG) – 27 years
Prediction: 10.6 – 12.8% increase to $1.04 – $1.06
Actual: 8.5% increase to $1.02
Forward yield: 1.18%
Despite good EPS growth, dividend growth at Graco slowed from last year’s 12% increase.
Eli Lilly and Company (LLY) – 11 years
Prediction: 8.0 – 10.6% increase to $4.88 – $5.00
Actual: 15.0% increase to $5.20
Forward yield: 0.89%
The drug company continued its pattern of dividend growth in the mid-teens despite falling EPS growth.
Mastercard Incorporated (MA) – 13 years
Prediction: 14.0 – 17.5% increase to $2.60 – $2.68
Actual: 15.8% increase to $2.64
Forward yield: 0.62%
The international digital money corporation extended its history of double-digit growth.
McCormick & Company, Inc. (MKC) – 24 years
Prediction: 2.6 – 6.4% increase to $1.60 – $1.66
Actual: 7.7% increase to $1.68
Forward yield: 2.46%
Dividend growth accelerated from last year’s 5% boost at the flavor and spices company.
Merck & Co., Inc. (MRK) – 13 years
Prediction: 4.1 – 6.2% increase to $3.04 – $3.10
Actual: 5.5% increase to $3.08
Forward yield: 2.83%
The third of four drug manufacturers to announce its annual dividend increase in December, Merck came in as expected, with a mid-single digit boost.
Nucor Corporation (NUE) – 51 years
Prediction: 1.0 – 2.9% increase to $2.06 – $2.10
Actual: 5.9% increase to $2.16
Forward yield: 1.24%
After last year’s 2% increase, the metals company rewarded investors with a decent boost.
Pfizer Inc. (PFE) – 14 years
Prediction: 2.4 – 4.9% increase to $1.68 – $1.72
Actual: 2.4% increase to $1.68
Forward yield: 5.84%
This is the 15th year of 4 or 8-cent annual dividend growth from the biopharmaceutical company.
SEI Investments Company (SEIC) – 33 years
Prediction: 7.0 – 9.3% increase to $0.92 – $0.94
Actual: 7.0% increase to $0.92
Forward yield: 1.45%
In addition to a 7% dividend increase, the investment company increased its stock buyback fund by $250 million.
Stryker Corporation (SYK) – 31 years
Prediction: 4.0 – 6.0% increase to $3.12 – $3.18
Actual: 6.7% increase to $3.20
Forward yield: 1.07%
Dividend growth slowed at the medical devices company – just not as much as expected.
The Hanover Insurance Company (THG) – 20 years
Prediction: 3.7 – 6.2% increase to $3.36 – $3.44
Actual: 4.9% increase to $3.40
Forward yield: 2.80%
Dividend growth slowed at the property insurer as claims were higher than planned.
The Toro Company (TTC) – 21 years
Prediction: 8.8 – 13.2% increase to $1.48 – $1.54
Actual: 5.9% increase to $1.44
Forward yield: 1.50%
The business outlook for the equipment manufacturer slowed over the course of the year, resulting in a slowing of dividend growth from its compounded growth rate of 17%.
WEC Energy Group, Inc. (WEC) – 21 years
Prediction: 5.1 – 7.7% increase to $3.28 – $3.36
Actual: 7.1% increase to $3.34
Forward yield: 3.97%
The Wisconsin utility begins its 3rd decade of dividend growth with another 7% increase.
Predictions for January’s Dividend Increases
There are 14 long-term dividend growth companies I expect to announce their annual increases in January. First, here are my predictions for two featured companies:
Chevron Corporation (CVX) – 36 years of dividend growth
After hitting a nadir in 2020 – at the height of the pandemic – Chevron’s earnings and sales have come roaring back. Adjusted earnings in 2022 were more than double those of the same period the prior year and the company posted record annual cash flow from operations of nearly $50 billion. In addition to dividend growth and stock buybacks (the company announced a $75 billion buyback program in January), Chevron is using its free cash flow to expand its operations. The company bought a majority stake in ACES Delta, a clean energy storage hydrogen project in Delta, Utah. It also recently announced the acquisition of Hess Corporation for $53 billion. Earnings are moderating in 2023 as oil prices come down; over the first 3 quarters of the year, adjusted EPS are down by a third year-over-year.
Chevron has a dividend growth record in the 5 – 6% range, with last year’s 6.4% boost being the largest increase since 2020. So, although the company is coming off an outstanding 2022, between the drop in earnings in 2023 and the Hess acquisition, investors can look to Chevron keeping its dividend growth rate consistent in the 5 – 6% range.
Prediction: 5.0 – 6.3% increase to $6.34 – $6.42
Predicted Forward Yield: 4.25 – 4.30%
Kimberly-Clark Corporation (KMB) – 51 years
Investors in the personal and household products company have seen slowing dividend growth, with annual increases below 2% over each of the last two years. This was primarily due to the effects of the pandemic and the resulting inflation, which caused input costs to spike. In response, Kimberly-Clark has instituted a program to cut costs. In 2022, the program as implemented saved $115 million. Unfortunately, inflation resulted in nearly a quarter billion dollars of higher input costs, more than offsetting the savings. This resulted in a 9% drop in adjusted EPS in 2022.
The good news is that the cost savings are picking up in 2023; the company has provided guidance of nearly $300 million in savings over the course of the full year. So despite net sales growth of 1 – 2%, adjusted EPS are expected to grow at least 15%.
What does this mean for this year’s dividend increase? While earnings are recovering, Kimberly-Clark is burdened with a heavy debt load and sports a payout ratio above 80%. Investors can expect another 2% increase, with a small chance of something slightly higher.
Prediction: 1.7 – 3.4% increase to $4.80 – $4.88
Predicted Forward Yield: 3.95 – 4.02%
Here are my predictions for the 12 other long-term dividend growth companies which should announce annual increases in January:
| Company | # Yrs | Industry | Prediction (%) | New Annual Rate |
| Archer-Daniels Midland Company (ADM) | 48 | Consumer Defensive – Farm Products | 8.9% – 11.1% | $1.96 – $2.00 |
| The agricultural company saw a drop in revenue across all its business units, but the most significant fall was in its Nutrition segment, as demand slowed for plant-based protein foods. While still significantly profitable, the revenue drop caused ADM’s EPS to fall 9% in the first 3 quarters of 2023. The company won’t repeat last year’s 12.5% boost, but the company’s 30% payout ratio means ADM’s next boost might be in the double-digits. Predicted Forward Yield: 2.71 – 2.77% | ||||
| Air Products & Chemicals, Inc. (APD) | 41 | Materials – Specialty Chemicals | 8.0% – 10.3% | $7.56 – $7.72 |
| Despite a drop in sales, the chemical company cut administrative expenses in fiscal 2023, resulting in 13% adjusted EPS growth for the full year. The company continues to expand, with multiple projects to develop green hydrogen plants around the world. These plants use renewable energy to create hydrogen from water. With another 13% adjusted EPS growth expected in 2024, the company should announce a boost similar to last year’s 8% increase, with a chance that investors could see a 10% increase. Predicted Forward Yield: 2.76 – 2.82% | ||||
| Apogee Enterprises, Inc. (APOG) | 12 | Industrials – Building Products & Equipment | 8.3% – 10.4% | $1.04 – $1.10 |
| This producer of architectural products, and high-performance glass and acrylic products used in buildings, has a very consistent annual dividend growth rate around 9%. Although adjusted EPS are expected to fall 6% in fiscal 2024, the company’s rebound in 2023 and payout ratio below 25% means investors can look forward to another boost of at least 9% and possibly an increase in the low teens. Predicted Forward Yield: 1.95 – 2.06% | ||||
| Booz Allen Hamilton Holding Corporation (BAH) | 12 | Industrials – Consulting Services | 7.4% – 10.6% | $2.02 – $2.08 |
| Although it sports a 5-year compounded growth rate of 20%, the consulting company’s dividend growth rate is bound to slow – if only based on the increasing difficulty of growing as a company gets larger. Last year’s 9% dividend increase – while still a nice boost – was an example of this. With adjusted EPS growth of 8.3% last year and another 10% expected this year, investors should expect another year of 8 – 9% dividend growth. Predicted Forward Yield: 1.58 – 1.63% | ||||
| BlackRock, Inc. (BLK) | 14 | Financial – Asset Management | 2.0% – 5.0% | $20.40 – $21.00 |
| At one point, the investment manager had more than $10 trillion under management. When the market fell in 2022, assets under management and earnings fell also, with adjusted earnings down 13%. While the market is up in 2023, adjusted earnings haven’t fully recovered, with growth of less than 7% over the first 3 quarters of the year. BlackRock’s dividend increase last year was 2.5% – far below the company’s historical 10%+ growth. With the continued difficulties in the market, investors can expect another increase like last year’s. Predicted Forward Yield: 2.51 – 2.59% | ||||
| Church & Dwight Co., Inc. (CHD) | 27 | Consumer Defensive – Household & Personal Products | 3.7% – 5.5% | $1.13 – $1.15 |
| Church & Dwight is the manufacturer of baking soda and the owner of the Arm & Hammer brand of products. The company is a slow grower – it has grown its annual dividend by 4 cents in each of the last 2 years. Church & Dwight is growing through acquisitions and also has the Oxiclean, Xtra Liquid Detergent, and Waterpik brands in its stable. After a slight drop in 2022, the company expects to grow adjusted EPS by 6% in 2023. While this return to growth is welcome by investors, the company is likely to announce another year of 4-cent growth. Predicted Forward Yield: 1.20 – 1.22% | ||||
| Cincinnati Financial Corporation (CINF) | 63 | Financial – Insurance | 6.0% – 8.0% | $3.18 – $3.24 |
| After large insurance payments in 2022 due to Winter Storm Elliott, Cincinnati Financial’s combined ratio – a measure of profitability for insurance companies – fell a few percentage points, meaning that profitability improved. While the improving profitability in 2023 doesn’t fully offset the drop in 2022, investors will see a 64th year of dividend growth from Cincinnati Financial. Predicted Forward Yield: 3.07 – 3.13% | ||||
| California Water Service Group (CWT) | 56 | Utilities – Regulated Water | 0 – 3.8% | $1.04 – $1.08 |
| The water and wastewater utility has been expecting a decision from the California Public Utility Commission on a new rate structure but with the decision delayed, earnings have fallen more than 70% so far in 2023. This massive drop means minimal dividend growth, if at all, this year from California Water Service Group. Predicted Forward Yield: 2.01 – 2.08% | ||||
| Enterprise Bancorp, Inc. (EBTC) | 29 | Financial – Regional Banks | 6.5% – 8.7% | $0.98 – $1.00 |
| Earnings were flat in 2022 and continue to be flat so far this year at the Massachusetts-based regional bank. Despite last year’s 12% dividend boost, investors should expect something smaller this year – likely in line with the company’s decade-long average growth rate of 7%. Predicted Forward Yield: 3.04 – 3.10% | ||||
| Consolidated Edison, Inc. (ED) | 49 | Utilities – Regulated Electric | 1.9% – 3.7% | $3.30 – $3.36 |
| After 8% adjusted EPS growth in 2022 and expectations of another 10% in 2023, investors could be forgiven for expecting a large dividend increase this year. However, the New York-based electric utility has a very consistent history of 2 – 3% annual dividend growth. With the company sporting a high debt level and increasing the number of outstanding shares, the slow dividend growth will continue. Predicted Forward Yield: 3.63 – 3.69% | ||||
| Fastenal Company (FAST) | 24 | Industrials – Industrial Distribution | 8.6% – 14.3% | $1.52 – $1.60 |
| The industrial supplier and distributor sports a good dividend compounded growth rate of 14% over the last decade. In addition, Fastenal announced a special dividend of 38 cents in mid-November. With 18% adjusted EPS growth in 2022 and another 7% growth so far in 2023, it looks like the company’s dividend growth rate should continue. Predicted Forward Yield: 2.35 – 2.47% | ||||
| Franklin Electric Co., Inc. (FELE) | 31 | Industrials – Specialty Industrial Machinery | 6.7% – 8.9% | $0.96 – $0.98 |
| Mid-cap company Franklin Electric manufactures systems that focus on the movement and management of water, fuel and electricity. The company is looking at minimal EPS growth for 2023 due to drops in sales in the Distribution and Fueling Systems segments, more than offsetting an increase in the Water Systems segment. This comes after 22% EPS growth in 2022. Although the company sports a decade-long dividend growth rate of 11%, the slower growth this year will put the brakes on the increase this year. Investors can expect an increase in the high single digit percentages. Predicted Forward Yield: 0.99 – 1.01% | ||||
Summary
Dividend growth investors ended 2023 with several double-digit increases – Mastercard, Eli Lilly, Broadcom, and Balchem Corporation all announced 10%+ dividend increases in December. In addition to Eli Lilly, drug companies Bristol-Myers, Merck, Amgen and Pfizer announced their annual increases in December; Bristol-Myers, Merck and Amgen announced 5% increases, while Pfizer announced a 2.5% increase. Dividend increases from financial companies Franklin Resources, The Hanover Group and SEI Corporation came in between a low of 3% (from Franklin Resources) and 7% (from SEI Corporation).
Looking forward to January, investors may see 10%+ increases from up to 5 companies: Apogee Enterprises, Air Products & Chemicals, Booz Allen, Archer Daniels, and Fastenal. BlackRock will continue to struggle to return to its usual dividend growth rate, as the company’s earnings growth has slowed quite a bit. And – important to many dividend growth investors – widely-held Chevron will extend its growth streak to 37 years with an increase in the mid-single digit percentages.
I wish a happy and prosperous 2024 to all of my readers! And thank you for your continued support – it means more than I can say.
