Expected Dividend Increases in February

One month down in 2015!  Hopefully everyone started out 2015 with a strong dividend month to really set the tone for the rest of the year.    As most of you know by now, each month, we project which Dividend Aristocrats are expected to announce a dividend increase during the upcoming month.  Why? Because as dividend growth investors, we love seeing our dividend income streams increase!  With that being said, let’s see which Aristocrats are expected to announce dividend increases in February.

Dividend Increases in January

As always, I have to check and see how my projections from the prior month unfolded.  In our January installment of the series, we identified three potential Aristocrats that were slated to increase their dividend this month.  Did they deliver?

  1. Consolidated Edison (ED)–  As Lanny discussed in his ED stock analysis, the company has a 3 year average dividend growth rate of 1.64%.   So the company is a high yield, low dividend growth stock.   This year, ED announced a $.02/share, or 3.2%, increase in their quarterly dividend, which is above their recent average.  Even though the increase is in line with expectations, it still provides shareholders more value than they had in the prior year and most importantly, ED kept their dividend increase streak alive.  For this reason, among others, we believe ED makes great foundation stock in any new dividend investors portfolio.
  2. HCP Inc. (HCP)– Sadly, as I write this article, HCP still has not announced a dividend increase.  I have been waiting on the edge of my seat for this increase, as HCP is one of the larger holdings in my portfolio.   The company typically announces their increase towards the end of the last week in January, so we should expect an announcement any day.  Their 3 year average dividend increase is 4.3%, so let’s hope that management decides to surprise us all an announce an increase greater than the recent average!
  3. McGraw-Hill Financial Inc (MHFI)– Wow. Similar to HCP, MHFI has not announced a dividend increase at the time of the article.  In the last couple of years, MHFI has also waited until the last couple of days of the month to announce an increase.  So shareholders, don’t worry, your announcement should come by the end of the week.  Over the last 3 years, the company has average a dividend growth rate of 6.32%, so you should be rewarded with a nice increase when the company does decide the news!

Expected Dividend Increases in February

A very anti-climactic January, as two of the three companies have not announced their increase by yet.  I wouldn’t worry though. Even though dividends aren’t guaranteed, these companies have earned a place on the exclusive Dividend Aristocrat list for a reason.   While January was a relatively quiet month in terms of dividend increase announcements, this month should be a much more active month as many more companies are expected to announce dividend increases in February.  Will you benefit from an increase this month from one of the following companies?

  1. Archer-Daniels-Midland Co (ADM) – ADM, one of the main players in the farm product industry, has a current dividend yield of 1.99% and payout ratio of 31%.  The company has increased their dividend 14.75% on average over the last three years and really rewarded shareholders by announcing a 26.3% dividend increase last year.  With a low payout ratio and over $7 of cash/share, the company has plenty of room to continue growing their dividend by at least 10% if they choose.  With the excess cash on hand and the low payout ratio in mind, perhaps a combination of dividends and share buybacks may be in the company’s future (See why a buyback program would also be great news for dividend investors)?
  2. Bemis Co Inc (BMS)– BMS has a current dividend yield of 2.41% and a payout ratio of 45.3%.  Over the last five years, BMS has increased its quarterly dividend by $.01/share annually.  For anyone that holds T like me, we are used to seeing this dividend increase pattern. Even though the company has the room to increase its dividend by a greater amount this year, I would not expect an increase outside of the norm.  
  3. Chubb Corp (CB)– It has been a while since I have researched CB.  Back in August, when I was deciding on which financial company to purchase, I considered buying CB due to its low PE Ratio, low payout ratio, and the company’s status as a Dividend Aristocrat.  However, as I discussed several times last year, even though the two companies passed our dividend stock screener, AFL appeared to be the better value at the time and therefore, so I passed on CB in favor of the duck!   Back to business.  CB currently has a dividend yield of 1.95% and a low payout ratio of 22%.  Over the last three years , CB has averaged a dividend increase of 8.7%.  It’ll be interesting to see if CB will surprise investors with a large dividend increase this year considering fellow Aristocrat AFL shockingly announced a lower than average dividend increase this year.  
  4. Coca-Cola Co (KO) – Even though I prefer competitor PEP to KO due to PEP’s diversified product offering, KO is still a great company to own.  The American icon is a worldwide brand that has been paying  dividend since the 1800s.  Currently, KO has a current yield of 2.88% and a payout ratio of 65.30%.  The last three dividend increases have averaged 9%, a very solid amount.  Even though the company’s payout ratio is higher than we would typically like to see (We filter for stocks with a payout ratio below 60%), there is no reason to believe the company cannot maintain the average dividend increase rate going forward. 
  5. Genuine Parts (GPC)- This major player in the auto parts industry has a current dividend yield of 2.36% and a payout ratio of 49.8%.     The company has average an annual dividend increase of 9% over the last three years.  Recently, GPC appeared on a filter I was running and since then, the company has been on my radar.  However, with a PE ratio greater than the current S&P 500 (~21), I am not quite ready to purchase shares.  If the stock continues to slide, as it is down 8.49% YTD, I may be forced to initiate a position in the company.  Regardless, you should see this company on my watch list for the next several months.  
  6. Kimberly-Clark (KMB)– As many of the regular followers know, I love stocks that are staples in every household.  If you scroll through KMB’s product listing, you would be shocked with how many of their products can be found throughout your house.  KMB has a current dividend yield of ~3%, a payout ratio of 58.5%, and a three-year average dividend increase of 6.3%.  My February watch list is filling up fast, as KMB’s stock is also down ~4% YTD. If the stock continues to slide I will have to give purchasing the company strong consideration, especially considering the fact that their PE ratio is lower than their major competitors (PG, UL, and CL). 
  7. T. Rowe Price Group (TROW)- This financial services company has averaged a double-digit dividend increase of 12.4% over the last three years.  Currently, the company’s dividend yield is 2.15% and their payout ratio is 37.2%.  With a relatively low payout ratio, there is plenty of room to continue the streak of double-digit increases this month.  Let’s see if management can deliver once again. 
  8. Wal-Mart Stores (WMT)- The final Dividend Aristocrat on our list happens is one of the most recognizable names in the US.  WMT has a current dividend yield of 2.19% and a payout ratio of 39%.  Over the last three years, the company has increased their dividend by an average of 10%.  However, the 10% average is a little deceiving as the increases ranged from 2% last year to 18% in 2013.  So who really knows what to expect with the expected announcement this month.  With their current payout ratio, management has the capability to increase their dividend by their average if they choose.

As I mentioned at the beginning of this section, there are a lot of companies expected  to announce a dividend increase this month.  This list contains many great companies that would look great in any dividend investors portfolio.   Do you own any of the companies on this list? Are you expecting to receive an increase from a company not on this list?  Are you also getting tired of waiting for HCP to announce their dividend increase?

-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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21 thoughts on “Expected Dividend Increases in February

  1. I am too waiting for dividend increases. I have been quite good at beating the benchmark in the last 2-3 years with my Best Dividend Stocks of the year so now the pressure is on to keep it! 😉 I’m quite confident that GPC will do just great though.

    • DivGuy,

      You better be careful; the pressure is building and you can’t let your followers down now! Just kidding. GPC is a great company and the leader in a very compelling market, as consumers are looking to save at every opportunity. So why not specialize and be a market leader in an industry that provides lower cost options to consumers, especially when auto repairs can become very expensive. I hope it keeps on falling so I can add it to my portfolio.

      Thanks for stopping by.

      Bert

  2. While I’m looking forward to the KO increase, that payout ratio is already a bit high. Guess we’ll wait and see.

    The other one I’m really looking forward to is WMT. Hopefully we get a nice bump this time.

    Thanks for putting the list together!

    • Thanks for stopping by Seraph. It sounds like you will have a fun February, especially if you are monitoring two dividend giants such as KO and WMT. While KO’s payout ratio is high, they still have room to continue to grow their dividend, so I would at least expect a small increase. I can’t picture them jeopardizing their streak at this point!

      Bert

    • R2R,

      There are some very strong companies on this list. My mind was blown as I was putting this list together. ADM is a very interesting company at its current valuation. For being a market leader, it is trading at a discount among its peers and offers strong dividend growth. I may have to keep my eye on it if it continues to fall!

      Thanks for stopping by!

      Bert

    • Tawcan,

      I’m glad you are about to benefit from KO. I would love to own either KO or PEP. One day, when one of the two stocks tumble, I will purchase shares in one of the companies.

      Congrats on the future increase!

      Bert

    • MDP,

      I couldn’t believe how large the list was when I put it together. 8 companies, holy cow! By far the largest list I have compiled since I started this monthly column last May. I still can’t believe that HCP has not increased their dividend. I am definitely expecting an increase to be announced tomorrow considering it is the last business day of the month. So it sounds like you have their date pegged.

      Thanks for stopping by. Hopefully we will both receive a nice dividend increase tomorrow!

      Bert

    • Adam,

      WMT is right in your backyard! I can’t blame them for being excited about the stock. WMT has been on a tear the last year and has the ability to reward their shareholders well next month. I am hoping that your family will be blown away with the increase this year!

      Thanks for stopping by.

      Bert

  3. I love these posts! More money in my pocket for doing no work! The average pay raise for employees at my company have been 1.5% per year the past 5 years. When you see raises of 5, 10, 15% it is a wonderful feeling. I now own 2 of the companies above.. KMB and my recent purchase TROW. KMB I do not expect much of a raise from, perhaps 3-4% but TROW I’m expecting 13%.

    Thanks for the post!

    • Thanks ADD! I appreciate the kind words. You bring up an excellent point. I love investing in companies that increase their shareholder at a greater rate than my annual salary increase. It is just funny/ironic that your passive income stream is growing at a faster rate than you ordinary income stream. KMB is officially on my radar after compiling this list. I love consumer product companies, and KMB has some great brands under their umbrella. Just out of curiousity, how come you decided to invest in TWO over other asset management companies?

      Thanks for stopping by!

      Bert

  4. It’s a shame those companies haven’t posted their news on (hopefully) increases yet. BOO TO THEM! But yay to a great post listing some awesome, solid companies. I like these posts, because it gives you a nice little overview of what’s coming up and where we’ve just been.

    Keep up the good work guys,

    cheers

    • No kidding M. Hopefully they will post their dividend increase tomorrow. Or else I will have to reconsider how I evaluate these companies’ dividend increase trends haha I love creating these kind of posts. It helps me identify potential new investing opportunities as I try to capitalize on a company announcing a larger than expected dividend increase.

      Thanks for stopping by!

      Bert

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