Ivory Soap is one of the brands for which Procter & Gamble is known. The company will extend its dividend growth streak to 69 years in April. NNehring
This is the latest in my series of articles where I provide predictions of annual dividend increases for long-term dividend growth companies. In the middle of February, I provided predictions for 11 dividend growth companies that have historically announced annual payout increases in March. In this article I’ll look at another 10 dividend growth companies that I expect will announce their annual dividend increases in the first half of April.
Here are the results from my predictions from March (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 April:
(All yields are based on stock prices at the market close on Thursday, March 28th, prior to the market closure for Good Friday.)
Results for Dividend Increase Announcements from March
Colgate-Palmolive Company (CL) – 61 years of dividend growth
Prediction: 4.2 – 6.3% increase to $2.00 – $2.04
Actual: 4.2% increase to $2.00
Forward yield: 2.22%
Personal products company Colgate-Palmolive continues its pattern of 4 – 8 cent annual increases.
CareTrust REIT, Inc. (CTRE) – 10 years
Prediction: 1.8 – 3.6% increase to $1.14 – $1.16
Actual: 3.6% increase to $1.16
Forward yield: 4.76%
The healthcare REIT completes its first decade of dividend growth with this boost, which is double last year’s 2% increase.
Dollar General Corporation (DG) – 9 years
Prediction: 3.4 – 6.8% increase to $2.44 – $2.52
Actual: 0% increase to $2.36
Forward yield: 1.51%
The discount retailer is holding off on its next increase as it deals with a drop in earnings.
General Dynamics Corporation (GD) – 33 years
Prediction: 3.0 – 4.5% increase to $5.44 – $5.52
Actual: 7.6% increase to $5.68
Forward yield: 2.01%
Despite slow EPS growth, the defense contractor’s latest increase is right in line with its 5-year compounded growth rate.
Globe Life Inc. (GL) – 20 years
Prediction: 6.7 – 11.1% increase to $0.96 – $1.00
Actual: 6.7% increase to $0.96
Forward yield: 0.82%
The insurance company’s 20th year of dividend growth is consistent with its growth rate of 7%.
Horace Mann Educators Corporation (HMN) – 15 years
Prediction: 1.5 – 4.5% increase to $1.34 – $1.38
Actual: 3.0% increase to $1.36
Forward yield: 3.68%
This is the 4th year of 4-cent annual increases for the educator-focused financial company.
Hurco Companies (HURC) – 11 years
Prediction: 0 – 6.3% increase to $0.64 – $0.68
Actual: 0% increase to $0.64
Forward yield: 3.17%
With EPS down by 46% in 2023, the machine tool company is holding its dividend steady for now.
Kadant Inc. (KAI) – 12 years
Prediction: 10.3 – 13.8% increase to $1.28 – $1.32
Actual: 10.3% increase to $1.28
Forward yield: 0.39%
The industrial machinery company continues the pattern of 10%+ increases.
Linde plc (LIN) – 31 years
Prediction: 8.2 – 9.8% increase to $5.52 – $5.60
Actual: 9.0% increase to $5.56
Forward yield: 1.20%
This is the 2nd year of 9% dividend growth from the industrial gases company.
SpartanNash Company (SPTN) – 13 years
Prediction: 2.3 – 4.7% increase to $0.88 – $0.90
Actual: 1.2% increase to $0.87
Forward yield: 4.30%
The food distributor keeps its dividend growth streak going with a 1-cent annual increase.
Steel Dynamics, Inc. (STLD) – 14 years
Prediction: 15.3 – 20.0% increase to $1.96 – $2.04
Actual: 8.2% increase to $1.84
Forward yield: 1.24%
Dividend growth at the metals company decelerated from last year’s 25% boost.
Predictions for Dividend Increases in the First Half of April
There are 10 long-term dividend growth companies I expect to announce their annual increases in the first half of April. First, here are my predictions for three featured companies:
Costco Wholesale Corporation (COST) – 19 years of dividend growth
Despite its size, Costco continues its rapid growth. After posting EPS growth of 8% in fiscal 2023, the warehouse retailer recently announced year-over-year sales growth of 5% and EPS growth of 18% for the first half of fiscal 2024. The sales growth was primarily from its international stores, with growth in Canada at 9% and Rest of World sales growth of 8%, in contrast with 4% growth in the United States.
Historically, Costco has grown its dividend in the low double-digit percentages, with a dividend growth rate in the 12 – 13% range. This rate doesn’t include the effects of any special dividends, which the company periodically announces. Current investors in Costco received a late Christmas gift from Costco when the company announced a $15 special dividend right before the New Year. This was the first special dividend since 2020, when Costco paid out $10 a share. These special dividends haven’t slowed the company’s dividend increases. With expected EPS growth in the teens, investors can look forward to another good boost to their income from Costco this month.
Prediction: 11.8 – 13.7% increase to $4.56 – $4.64
Predicted Forward Yield: 0.62 – 0.63%
Johnson & Johnson (JNJ) – 62 years
One of the largest healthcare companies and drug manufacturers (second to Eli Lilly and just ahead of Merck in market cap), Johnson & Johnson has one of the longest dividend growth streaks among all companies (it’s in the top 15 among publicly traded companies). The company became a pure healthcare play when it spun off its consumer products business into the independent company Kenvue (KVUE) in 2023.
With its focus on healthcare, the company has two business segments. The Innovative Medicine segment focuses on medicines in a variety of areas including Neuroscience, Infectious Diseases, Cardiovascular, and Pulmonary Hypertension. The MedTech segment manufactures and markets medical products in the areas of Orthopaedics, Interventional Solutions, Surgery, and Vision. Sales for both segments grew in 2023, with the 11% growth in the MedTech segment overwhelming the 4% growth in the Innovative Medicine segment. This growth contributed to adjusted EPS growth of 11%; GAAP EPS, however, was down 15%, primarily due to the additional costs from litigation that the company had to pay last year.
Historically, the company has a consistent compounded growth rate around 5 – 6%. While adjusted EPS growth of 11% could support a larger increase, the company is likely to play it safe and maintain its dividend growth rate. Investors are likely to see a slightly higher dividend increase from last year’s 5.3% boost, but still in the mid-single digit percentages.
Prediction: 5.9 – 6.7% increase to $5.04 – $5.08
Predicted Forward Yield: 3.19 – 3.21%
The Procter & Gamble Company (PG) – 68 years
Consumer products company Procter & Gamble has dozens of well-known brands, including Head & Shoulders shampoo, Old Spice deodorant, Gillette razors, Crest toothpaste, and the laundry detergent brands Tide and Gain. The company spends the bulk of its free cash flow on dividends and share buybacks, so continued dividend growth depends on continued free cash flow. But with a dividend growth streak of nearly seven decades, Procter & Gamble isn’t likely to stop boosting its payout anytime soon unless absolutely forced to. In fact, the company is tied for second for a number of years of dividend growth, with Dover Corporation (DOV) and Parker-Hannifin Corporation (PH), and behind the 69-year growth streak of American States Water Company (AWR).
Procter & Gamble has compounded its dividend around 5% over the last decade, but earnings and free cash flow pressure caused last year’s dividend be below that – the company announced a 3% boost. The company has gradually reduced its 2024 earnings guidance and is now looking at zero GAAP EPS growth and adjusted EPS growth of 8 – 9%. While the adjusted EPS growth looks good, this doesn’t account for the reduction in the intangible value of the company’s Gillette brand along with higher discount rates that the company is using to keep up sales, so it looks like investors can expect a smaller dividend boost, similar to last year’s.
Prediction: 2.0 – 4.0% increase to $3.8381 – $3.9133
Predicted Forward Yield: 2.37 – 2.41%
Here are my predictions for 7 other long-term dividend growth companies which should announce annual increases in the first half of April:
| Company | # Yrs | Industry | Prediction (%) | New Annual Rate |
| Aon plc (AON) | 13 | Financial – Insurance Brokers | 8.9% – 10.6% | $2.68 – $2.72 |
| The Dublin, Ireland-based insurance broker continues to grow its earnings and free cash flow, posting increases of 3% and 5% in 2023, respectively. While these increases wouldn’t normally support the annual 9 – 10% dividend increases that investors have gotten used to, with a payout ratio of 20%, Aon has plenty of room to maintain its dividend growth rate. Predicted Forward Yield: 0.80 – 0.82% | ||||
| American Water Works Company, Inc. (AWK) | 16 | Utilities – Regulated Water | 67% – 8.8% | $3.02 – $3.08 |
| American Water Works is the largest publicly traded water utility in the United States, serving 3.5 million customers. The company continues to grow through acquisitions, targeting companies that have 5,000 – 50,000 utility connections. The plan continues to work as American Water grew EPS by nearly 9% in 2023 and is expecting another 7% growth in 2024. This earnings growth will support continued dividend growth in the high single digits. Predicted Forward Yield: 2.47 – 2.52% | ||||
| H.B. Fuller Company (FUL) | 54 | Basic Materials – Specialty Chemicals | 4.9% – 7.3% | $0.86 – $0.88 |
| H.B. Fuller is a materials company that specializes in adhesives and coatings. While not very well known, the company has one of the longer dividend growth streaks and has a history of more than half a century of payout growth, making it a Dividend Champion. The company’s earnings hiccupped in 2023, with adjusted EPS down 3% year-over-year. However, the company is guiding to 11% adjusted EPS growth in 2024; the company’s boost this year will likely be in the mid-single-digit – consistent with the company’s 5-year dividend growth rate. Predicted Forward Yield: 1.08 – 1.10% | ||||
| Raytheon Technologies Corporation (RTX) | 30 | Aerospace & Defense | 4.2% – 6.8% | $2.46 – $2.52 |
| Formed by the merger of United Technologies and Raytheon in the middle of 2019, Raytheon Technologies entered the group of large defense and aerospace contractors. The company issued shares to finance the merger and has since repurchased nearly 30% of the shares that were issued. Raytheon has grown its adjusted EPS slowly in the last few years; 2023 growth came in at 6% and 2024 growth is expected to be about 5%. This is consistent with the mid-single-digit dividend growth the company has posted. Investors can expect another year of a mid-single-digit dividend increase. Predicted Forward Yield: 2.52 – 2.58% | ||||
| The Southern Company (SO) | 22 | Utilities – Regulated Electric | 1.4% – 2.9% | $2.84 – $2.88 |
| The Atlanta-based utility has compounded its dividend by roughly 3% over the last decade. The company sports a payout ratio of 77%, meaning Southern Company’s dividend growth rate probably won’t exceed its EPS growth rate. The company is guiding to 10% adjusted EPS growth in 2024 but saw growth come in below 2% in 2023. Investors can expect – at best – another year of 3% dividend growth. Predicted Forward Yield: 3.96 – 4.01% | ||||
| Sonoco Products Company (SON) | 41 | Consumer Cyclical – Packaging & Containers | 2.0% – 3.9% | $2.08 – $2.12 |
| The packaging company saw sales drop 6% and adjusted EPS fall 19% in 2023, due primarily to the effects of inflation. However, this won’t likely jeopardize Sonoco’s dividend growth streak. Even with the drop in adjusted EPS, the company still sports a payout ratio below 40%. With 4 decades of growth under its belt, Sonoco is not going to walk away from it status as a dividend growth company anytime soon. Investors can expect this year’s increase to be similar to last year’s 4% boost. Predicted Forward Yield: 3.60 – 3.67% | ||||
| The Travelers Companies, Inc. (TRV) | 21 | Financial – Insurance, Property & Casualty | 7.0% – 9.0% | $4.28 – $4.36 |
| Dividend growth at the financial company and insurer has been accelerating for the last 3 years, ramping up from 3.6% in 2020 to last year’s 7.5% boost. With EPS growth of nearly 9% in 2023, investors can look forward to this year’s boost being slightly higher, as Travelers maintains its earnings by passing on increased costs to its customers. Predicted Forward Yield: 1.86 – 1.89% | ||||
Summary
March brought another month of moderate dividend increases, similar to what we’ve seen since the beginning of the year. Most of the increases were in the mid-single digits, although machinery company Kadant rewarded investors with a 10% increase. Two companies – discount retailer Dollar General and machine tool manufacturer Hurco – held their dividends steady. Hopefully, this is just to preserve cash while still maintaining their status as dividend growth companies. Colgate-Palmolive, one of the most widely-held companies, extended its streak to 61 years with a 4% boost.
Looking forward to the first half of April, three dividend champions – companies with at least a half century of dividend growth – will announce their annual increases. I’m expecting adhesives company H.B. Fuller (54 years of dividend growth) and healthcare company Johnson & Johnson (62 years) to announce a boost in the mid-single digits, while consumer products company Procter & Gamble (68 years) should announce an increase in the low-single-digit.
Other companies that will announce annual increases are Costco, which should reward investors with a double-digit boost, while utility American Water Works and insurer Travelers Companies should announce increases in the high-single-digit.
Readers should note that some of these companies may delay their annual increase into the third week of April, in which case I’ll push my prediction forward.
For those who celebrate, I wish you a Blessed Easter weekend!
