Food distributor will extend its dividend growth streak to 55 years in the second half of April.
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 March, I provided predictions for 10 dividend growth companies that have historically announced annual payout increases in the first half of April. In this article I’ll look at another 10 dividend growth companies that I expect will announce their annual dividend increases in the second half of April.
Here are the results from my predictions from the first half of April (the original predictions are available here), followed by my predictions for the dividend increases that I’m expecting to be announced in the second half of April:
(All yields are based on stock prices at the market close on Friday, April 12th.)
Results for Dividend Increase Announcements from the First Half of April
Aon plc (AON) – 13 years of dividend growth
Prediction: 8.9 – 10.6% increase to $2.68 – $2.72
Actual: 9.8% increase to $2.70
Forward yield: 0.88%
The insurance broker’s latest increase is consistent with its dividend growth history of 9 – 10% boosts.
American Water Works Company, Inc. (AWK) – 16 years
Prediction: 6.7 – 8.8% increase to $3.02 – $3.08
Actual: Deferred to late April or early May
The utility will likely announce its next dividend increase when it releases earnings on May 2nd.
Costco Wholesale Corporation (COST) – 19 years
Prediction: 11.8 – 13.7% increase to $4.56 – $4.64
Actual: 13.7% increase to $4.64
Forward yield: 0.63%
Powered by good earnings growth, Costco continues to reward investors with double-digit dividend increases.
H.B. Fuller Company (FUL) – 54 years
Prediction: 4.9 – 7.3% increase to $0.86 – $0.88
Actual: 8.5% increase to $0.89
Forward yield: 1.17%
The materials company beat my prediction by one penny. This year’s increase is slightly higher than last year’s 7.9% increase.
Johnson & Johnson (JNJ) – 62 years
Prediction: 5.9 – 6.7% increase to $5.04 – $5.08
Actual: Deferred to late April or early May
The healthcare giant should announce its next dividend increase in the week of April 15th.
The Procter & Gamble Company (PG) – 68 years
Prediction: 2.0 – 4.0% increase to $3.8381 – $3.9133
Actual: 7.0% increase to $4.026
Forward yield: 2.59%
Dividend growth accelerated at the consumer products company. This year’s boost was more than twice last year’s 3% increase.
Raytheon Technologies Corporation (RTX) – 30 years
Prediction: 4.2 – 6.8% increase to $2.46 – $2.52
Actual: Deferred to late April or early May
Defense contractor Raytheon should announce its next dividend increase around April 22nd.
The Southern Company (SO) – 22 years
Prediction: 1.4 – 2.9% increase to $2.84 – $2.88
Actual: Deferred to late April or early May
The Atlanta-based utility should announce its 23rd year of dividend growth in the third week of April.
Sonoco Products Company (SON) – 41 years
Prediction: 2.0 – 3.9% increase to $2.08 – $2.12
Actual: Deferred to late April or early May
The packaging company should announce its 42nd year of dividend growth in the third week of April.
The Travelers Companies, Inc. (TRV) – 21 years
Prediction: 7.0 – 9.0% increase to $4.28 – $4.36
Actual: Deferred to late April or early May
The insurer should announce its next dividend increase on or about April 19th.
Predictions for Dividend Increases in the Second Half of April
There are 10 long-term dividend growth companies I expect to announce their annual increases in the second half of April. First, here is my prediction for one featured company:
Sysco Corporation (SYY) – 54 years of dividend growth
Foodservice company Sysco breaks its business out into two segments, divided geographically: U. S. Foodservice operations and International Foodservice Operations. Domestic operations are the vast majority of the company’s business, making up 75% of total sales and nearly 90% of total profit. 2023 was a good year for the company, with sales up more than 10% in both business segments, driving adjusted EPS growth of 23%. Sales slowed in the first half of fiscal 2024, but were still up 3% across the company and, combined with controls on expenses, resulted in nearly 10% earnings growth year-over-year.
With inflation hitting the United States and earnings suffering, the company’s dividend growth had declined; last year’s increase – it’s a 54th year of dividend growth – was an annual increase of 4 cents, or 2% to $2.00/share. With expected adjusted EPS of between $4.20 and $4.40, Sysco’s payout ratio of 47% (at the midpoint of guidance) is not terribly high. However, the company has high debt levels – the company’s debt-to-equity ratio is more than 500%. Moreover, the continued risk of inflation and the potential that the company will not be able to pass on the increasing input costs of its products will probably give the company’s management and board pause before announcing any large dividend boosts. The adjusted EPS growth means that there’s a potential for a small acceleration in dividend growth, but another 4 cent annual increase wouldn’t surprise me.
Prediction: 2.0 – 4.0% increase to $2.04 – $2.08
Predicted Forward Yield: 2.71 – 2.76%
Here are my predictions for 9 other long-term dividend growth companies which should announce their annual increases in the second half of April:
| Company | # Yrs | Industry | Prediction (%) | New Annual Rate |
| Ameriprise Financial, Inc. (AMP) | 18 | Financial – Asset Management | 10.4% – 12.6% | $5.96 – $6.08 |
| The financial services firm saw adjusted EPS grow 24% in 2023, powered by 19% growth in wealth management client assets and 9% growth in assets under management. The company generally grows its dividend in the high single digits, but with this year’s EPS growth, investors can look forward to a double-digit boost. Predicted Forward Yield: 1.44 – 1.47% | ||||
| First Financial Bankshares, Inc. (FFIN) | 13 | Financial – Regional Banks | 5.6% – 8.3% | $0.76 – $0.78 |
| Like many regional banks, this Texas-based financial institution went through some rough times as the Fed increased interest rates over the course of the year. While the company earned more on its investments, it also had to pay out more to depositors, which reduced earnings. EPS fell 15% in 2023, meaning investors will likely see another 4-cent increase like last year’s boost. Predicted Forward Yield: 2.56 – 2.63% | ||||
| W.W. Grainger, Inc. (GWW) | 52 | Industrials – Industrial Distribution | 5.9% – 8.1% | $7.88 – $8.04 |
| Industrial distributor Grainger continues to grow its sales and earnings, which drives continues dividend growth and share buybacks. The company grew sales by 8% and adjusted EPS by 23% in 2023 and is looking at another 7% EPS growth in 2024. The company also invests much of its free cash flow in share buybacks; it has repurchased more than 8% of the outstanding shares since 2019 and is expecting to buy back another $1 billion of its shares in 2024. Year to year, the company’s dividend growth rate is pretty steady in the mid-to-high single digits, and investors can look forward to Grainger boosting its dividend similarly in late April. Predicted Forward Yield: 0.82 – 0.83% | ||||
| International Business Machines Corporation (IBM) | 28 | Technology – IT Services | 0.6% – 1.2% | $6.68 – $6.72 |
| Investors in the technology company have suffered through below-average dividend growth recently, with the company growing its annual dividend by only 4 cents in each of the last 4 years as IBM’s earnings stalled. Will things change this year? Well, 5% EPS growth returned to IBM in 2023 and free cash flow continues to grow but with a heavy debt load and a payout ratio near 70%, IBM’s likely to announce another small increase this year. Predicted Forward Yield: 3.66 – 3.69% | ||||
| Lithia Motors (LAD) | 13 | Consumer Cyclical – Auto & Truck Dealerships | 10.0% – 14.0% | $2.20 – $2.28 |
| This automotive retailer has grown quickly – mostly through acquisitions – since 2020. Investors have benefitted from the rapid growth, seeing their dividend payments grow at more than 17% annually over the previous decade. But with the economic headwinds hitting consumers, Lithia Motors’ EPS fell 18%. This will make it hard for the company to match its past dividend growth, but it’s likely the company will continue its pattern of double-digit growth. Predicted Forward Yield: 0.83 – 0.86% | ||||
| MetLife, Inc. (MET) | 12 | Financial – Life Insurance | 2.8% – 5.8% | $2.14 – $2.20 |
| The financial services company has boosted its dividend by 8 cents in each of the last 6 years, giving the company a 5-year growth rate of 4.4%. While its dividend growth is modest, MetLife uses its free cash flow to buy back its shares; over the last 5 years, it’s bought back more than a fifth of all outstanding shares. Given its focus on share buybacks, investors can expect another year of 8-cent annual dividend growth. Predicted Forward Yield: 3.05 – 3.14% | ||||
| Parker-Hannifin Corporation (PH) | 68 | Industrials – Specialty Industrial Machinery | 12.8% – 15.5% | $6.68 – $6.84 |
| Engineering company Parker-Hannifin has one of the longest dividend growth streaks among all publicly traded companies. After briefly stalling in 2019 and 2020, dividend growth has picked up with increases of 17%, 29% and 11% over the last three years, giving Parker-Hannifin a 5-year growth rate of 14%. The company saw good earnings growth last year, with adjusted EPS up 15%. And while EPS growth is expected to slow this year to about 4%, the company has plenty of room for a boost in the mid-teens. Predicted Forward Yield: 1.21 – 1.24% | ||||
| Portland General Electric Company (POR) | 17 | Utilities – Regulated Electric | 4.2% – 5.8% | $1.98 – $2.01 |
| The Oregon-based utility saw earnings fall in 2023, with adjusted EPS down 14% year-over-year. But the company reaffirmed its long-term growth rate of 5 – 7% based on 2022 earnings, which is consistent with its earnings guidance for 2024 – Portland General Electric is looking at an adjusted EPS range of $2.98 – $3.18. The expected earnings growth should persuade the board to announce another dividend increase in the 5% range. Predicted Forward Yield: 4.88 – 4.96% | ||||
| UGI Corporation (UGI) | 36 | Utilities – Regulated Gas | 2.7% – 5.3% | $1.54 – $1.58 |
| Energy company UGI markets and distributes electricity, natural gas and other energy products. The company saw earnings fall a bit in 2023, with adjusted EPS down 2.1% to $2.84. Going forward, the company is guiding adjusted EPS of +/-5% with zero growth at the midpoint of the guidance. The company has a lot of debt and with zero earnings growth, investors can expect another year – the 4th consecutive one – of an annual 6-cent dividend increase. Predicted Forward Yield: 6.56 – 6.73% | ||||
Summary
I always find writing the April predictions articles difficult. There are too many companies to fit into a single article, but a bunch of the companies shift their announcements one week in either direction, meaning that I’m never sure whether certain companies should be in the first April article or the second. So while I gave predictions for 10 companies in my last article, only four of them actually announced their next dividend increase over the last two weeks. Investors were rewarded with a nearly 14% increase from Costco and a 7% boost from Procter & Gamble. Insurance broker Aon announced a 10% increase and specialty chemical company H. B. Fuller beat my expectations with an increase of 8.5%.
The remaining six companies will join another 10 companies to announce their annual increases in the second half of April. Investors can look forward to double-digit boosts from investment manager Ameriprise Financial, car retailer Lithia Motors and engineering company Parker-Hannifin. Widely held companies like Sysco should announce an increase in the low single digits, and IBM will probably continue its pattern of minimal increases – my assessment is that the best investors will see is an 8-cent annual dividend increase.
