Expected August Dividend Increases

As we approach a new month, it is time once again to see which companies have historically increased their dividend in August.   Could the recent pullback that occurred at the end of last week present a buying opportunity for a Dividend Aristocrat right before the company announces a dividend increase?  ‘

Before jumping into August, I want to see how I performed in July.  Of the two companies, only one has announced a dividend increase to date. Luckily there are still a few days remaining in July for the other.

  • Stanley Black & Decker (SWK) announced a $.02/share dividend increase from $.50 to $.52.   The increase was part of the announcement of a great quarter for the company, which saw its stock price jump 6.75% on Friday due to a strong Q2 and the company raising its future outlook.  SWK was one of the few bright spots in an earnings week that beat up many Dividend Aristocrats.
  • Walgreens (WAG) has not announced a dividend for the quarter yet, which is very shocking.  In the past, the company has always announced their dividend in the second week of the first month of the new fiscal quarter.  Usually when a company deviates away from its dividend schedule an interesting development follows.   All signs indicate the company has been on fire this year (YTD 28% increase in price) and the company still has a dividend margin of safety (Payout of only 42%).  I will continue to monitor the developments going forward.

Now that we have reviewed the July companies, it is time to look forward to August to see which Dividend Aristocrats have historically announced an increase during the month.

  • Cincinnati Financial Corp. (CINF)- One of the stocks on my watch list are preparing to announce an increase! In the past, the company usually announces an increase slightly below 5%.  The company is still a little expensive for me compared to other insurers (17.41 as of 7/25/14), so I would like to see a pullback before I would initiate a position.  CINF is currently yielding 3.69% with a payout ratio of 59.5%.
  • Dover Corp. (DOV). DOV is currently yielding 1.69% and has a payout ratio of only 26.4%.   The last five dividend increases have averaged 9% while the last increase was below this average (7%).   The company announces their August dividend at the beginning of the month, so we should know the fate of the dividend soon.
  • Illinois Tool Works (ITW).  ITW is currently yielding 1.97% and has a payout ratio of 33.5%.  The last four dividend increases have averaged 8%.   Similar to DOV, ITW usually announces the increase in the first week of August.
  • Leggett & Platt (LEG).  LEG is currently yielding 3.57% and has a very high payout ratio of 85%.   The company has increased the dividend $.01 per share over the five years, so I would expect the company to continue the trend going forward. While the company just announced an strong second quarter that resulted in an adjusted EPS of $.48/share, the projected payout ratio is still high at 64.5% (I increased the dividend $.01/share based on their dividend history and annualized the second quarter earnings to calculate this figure).   However, 64.5% provides a larger cushion than the current level.

Let’s see what the month of August brings us.  I am still curious about the WAG tale, so I’ll keep everyone updated once I find out more information.  Does anyone own the four stocks expected to increase their dividend?

Bert

DISCLOSURE: I DO NOT RECOMMEND ANY DECISION TO THE READER or ANY USER, PLEASE CONSULT YOUR OWN RESEARCH. THIS IS ACTUAL DATA, ANALYSIS, HOWEVER I BASE NO INVESTOR RECOMMENDATION.  THANK YOU FOR YOUR UNDERSTANDING.
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5 thoughts on “Expected August Dividend Increases

    • R2R,

      I don’t hold any of the companies either. This activity is really opening my eyes to a new class of dividend stock. Each month I seem to find new companies to add to my watch list!

      I have been watching the Canadian banks closely. Just out of curiousity, Is there a reason you picked BNS over the other banks? Is it because of the constant dividend increases?

      Bert

  1. I’m trying to figure out what WAG is up to. I understand maybe extending the normal announcement by a week or so but we’re about 3 weeks overdue now. Not sure if this is good news or bad news but I keep checking in on WAG a few times each day to see if it’s been announced.

    WAG’s the only one you mentioned that I own although I’m saving a spot for ITW when it gets cheaper. I’ll probably have to wait until the next recession to get some good value.

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