Expected Dividend Increases in April

One quarter is almost in the books.  Lanny and I had quite the active month and added some nice dividend income to our portfolios, as Lanny purchased CAT (twice) and HCP and swapped LO for PM last week while I added four new stocks to my portfolio and re-upped my position in one tobacco stock (I’m not spoiling the surprise completely).   As I said, a crazy month for us.  While we were active and many companies paid dividends in March, it was a relatively quiet for Dividend Aristocrats as only a few were set to announce increases last month.  Will that change in April?  Did  the companies follow through with their expected dividend increases last month?  Let’s find out!

 Dividend Increases in March

As I mentioned, March is a relatively quiet month for Dividend Aristocrats expecting to announce a dividend increase.  After a record eight companies announced an increase in February, only two were slotted to announce an increase in March.  Let’s see if the two companies followed through.

  1. Air Products & Chemicals Inc (APD)– As discussed last month, APD had the tools to announce a large dividend increase or share buyback program, as the company has a low payout ratio, a 10% average dividend growth over the last three years, and plenty of cash on hand.  Did they follow through?  In short, I was a little ambitious with my projections and the company’s announcement did not meet my lofty expectations.  Once again showing that no matter how much information you have at your disposal, you can never truly know what management has up their sleeves.  In March, APD increased their quarterly dividend $.04/share, from $.77/share to $.81/share, a 5.2% increase.  This is below their recent average increase of >9%.  While the increase was disappointing, the amount still outpaces inflation so investors will not lose any purchasing power.
  2. Colgate-Palmolive (CL)- As the readers of this blog probably know, I love consumer stocks.  My love was validated this week with the exciting merger announcement between Kraft and Heinz.  CL fits the mold of a stock that I would love to own and I will always be watching the stock to buy on a large dip.  Prior to this announcement, CL has a three-year average dividend increase of 7.5% and announced a large buyback program last year.  This year, CL announced another dividend increase below their average, increasing their quarterly dividend $.02/share from $.36/share to $.38/share, or 5.5%.  Again, below the average but above inflation.

Expected Dividend Increases in April

Last month had some disappointing announcements, as both companies announced increases below their average.  As we turn the calendar, we are expecting some heavy-weight dividend growth stocks to announce dividend increases this month.  I would be shocked if every dividend investor does not own one of the companies listed here, so please let me know if you don’t.  Let’s take a look ahead and see what is in store for the month to come.

  1. Exxon Mobil Corp. (XOM–  This is probably going to be the most interesting story of the month, at least the most interesting story of the stocks listed in this article.  As turbulent as the oil market has been over the last several months, we do not know the true impact lower oil prices will have on the major oil companies as the companies have not released earnings over a full quarter of low prices.  As first quarter earnings are released, we will get a much clearer picture of the impact of the current oil environment and how it will continue to impact companies in the long-term.  The big wild card is what will Exxon do with their dividend, as I believe that will be telling of the current environment? After all, they are a Dividend Aristocrat that has increased their dividend for 32 consecutive years with an impressive average three-year dividend of 13.78%; this includes the Great Recession, which caused many great dividend payers to snap their dividend increase streak.    For companies on this list, it takes a major event to cause them to stop increasing their dividend and fall off of the list, which is why I believe this month will be so telling for Exxon and other oil companies.  Will the decrease in oil price have such a large long-term financial impact that it will cause Exxon to forgo increasing their dividend to preserve the long-term free cash flow?  Who knows, but we will sure find out.
  2. Johnson & Johnson (JNJ)- JNJ is a staple dividend growth stock and is a company that I will one day own.  I consider it one of those stocks that I am willing to pay a premium for, as the company has solid financials, a great product portfolio, and a great dividend track record.  I put this in the same class as I do PG.  Currently, JNJ sports a 2.79% and has a three-year average dividend increase of 7.09%.  Last summer, JNJ announced a $5 billion share buyback program, which we know is another way to provide value to dividend investors.  The company has a rock solid balance sheet and a payout ratio of 36.9%; thus, I do not see any reason why the company cannot at least meet their three-year average.
  3. PPG Industries (PPG)– PPG is a company I have not followed closely. But being from Cleveland, I am pretty familiar with one of their competitors: Sherwin Williams.  The specialty chemicals company is a low yield dividend growth stock (~1.2%) with plenty of room to grow its dividend, (payout ratio = 17.3%), and the means to continue to increase its dividend (>8 cash/share).  PPG has a three-year average dividend increase of 5.6%;  however, this total is skewed by the 9.8% increase last year as the two prior years increases were only ~3.5%. This is a little shocking to me, as typically low yielding stocks have higher growth rates.  We will see if management reverts to the three-year average this year or announces a larger increase more in line with last year’s increase.
  4. Procter & Gamble (PG)– As I said, this month has some heavyweight dividend stocks expected to announce an increase.  PG is one of my favorite stocks in my portfolio, as I know it will provide me with steady dividend increases and appreciation over a long period of time.  The company has a strong brand that provides management flexibility to sell a strong product line or complete a spin-off, if shareholder value is needed.  For these reasons, we believe it is one of the best foundation stocks for any dividend growth investor’s portfolio.  Over the last three years, PG has averaged a dividend increase of just over 7%.   With a payout ratio around 74%, I do not see any reason why management will not have an increase around the three-year average.  My guess is that the increase will fall between 6.5% and 7.5%.

There are some great companies set to increase their dividend this month.  In addition to the Aristocrats, Lanny and I are set to receive a dividend increase from IBM, which we both have bought multiple times over the last year.  We are watching that announcement closely as we have some pretty lofty expectations for Big Blue.

Do you own any of the four Aristocrats expected to announce an increase this month?  Which non-Dividend Aristocrats are set to make an announcement for you?  How did your March fare?  Any consumer stock recommendations to complement my position in PG and KRFT?

-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.
Facebooktwitterredditpinterestlinkedinmail

18 thoughts on “Expected Dividend Increases in April

  1. Thanks for sharing Bert! I own 3 of the 5 you mentioned so that isn’t bad at all! I’m excited to see what the raises will be this year. While you’re seeking consumer names, have you considered a beverage company or a telecom? There seem to be some good options retreating toward fair value there. Hope you have a great week ahead!

    • No problem Ryan! I love putting this article together. Looks like you are going to have a rewarding month of dividend increases. IF I had to guess, you own XOM, IBM, and PG! A beverage company would be a great addition to my portfolio, as right now I only own shares in DEO. But I would love to add PEP or KO if the price pulled back a little. In terms of telecom, I always have an eye on VZ to compliment my T position. There was a time that I almost invested in VZ, but then other stocks became discounted and I figured I would circle back to VZ at a later date. Needless to say, I still haven’t circled back to VZ.

      Any suggestions for beverage/telecom companies? Are any on your watch list right now?

      Thanks for stopping by!
      Bert

      • No XOM for me. I hold JNJ as the third, otherwise great guesses! I forgot about DEO, which is a great company I’d want to own at some point. But yeah, you discovered why I mentioned beverage products in your recent comment on my blog, hehe. KO and PEP seem like solid ‘always’ picks. DPS should fall back down once the currency issues subside, but we’ll see. I might chip away at both KO and PEP in the coming months here via Loyal3 and am pretty full on telecoms at the moment but both T and VZ seem like great undervalued consumer services stocks with VZ showing more growth while T has that sweet huge dividend. I’ll be curious to see where your new funds go and wishing you the best continued success my friend!

        • As I said in the DivGuy’s comment, it seems like everyone owns JNJ. I am really missing out. You put up a very compelling argument for KO, and I will be watching KO closely now as more funds hopefully become available. I think you have a great strategy of slowly adding positions in both companies. In the long run, it is a winning strategy, especially for those two iconic brands. I am torn if the telecom industry is discounted or if the PE ratios are around their historical levels. I have been watching it for a few years now, and the PE ratios for those two companies have not really moved. That’s not necessarily a bad thing though!

          I’ll make sure to keep you updated with where my funds are going next. You won’t be waiting long though, I just made a trade today…

    • That’s why I love those companies. You never have to worry about their dividend increases. Every year in April you know you are getting a nice bump! For us dividend growth investors, what more could we ask for??

      Thanks for stopping by!

      Bert

    • I don’t blame you! I will be joining you as a fellow JNJ shareholder one day. Great company with a long history of solid dividend increases. What’s not to be excited about?

      Thanks for stopping by!

      Bert

  2. Bert,

    There aren’t many occupations where you can “expect” big time raises like we get with these names! I’ve been holding JNJ for years and loving the returns.

    Take care,
    – Ryan from GRB

    • Ryan,

      Thanks for stopping by! You are SPOT on. Not too many people benefit from high single digit or low double digit wage increase each year. That’s a great way to think about it, especially when you retire and your dividend income can become your sole source of income. Imagine that, your income stream grows larger in retirement than it did while work! However, our employers have us beat in the moment, as their base wages defeat our dividend income. But trust me, that will change one day soon!

      Bert

  3. You are right on the XOM, once they release the result it will paint a clearer picture of where does the company stand with this oil price level. We will see how much cash flow they can generate and how much dividends/dividend growth they can provide while oil price is cheap.

    I am also looking forward how much JNJ and PG increase are going to be.

    Thanks for sharing!
    FFF

    • FFF,

      No problem! Thanks for stopping by. I don’t know about you, but I am excited for XOM and CVX to release their announcements this month. I just want the mystery of the impact of low oil prices to end. It will definitely help up as individual investors plan our investments and determine if we need to continue to focus on oil or shift our focus elsewhere. Let’s just hope the XOM announcement goes well!

      Bert

    • Man Mike, everyone is commenting about how excited they are about JNJ! I am getting bummed that I am missing out on the fun. Maybe it is time to invest in JNJ and join the party? Would be a great long-term investment for my portfolio and a buy that I probably would never have to focus on again.

      I don’t think you should be shy by telling JNJ how much you love it. I’m sure you have told the company already by buying plenty on their products! Thanks for stopping by.

      Bert

  4. Thanks for the article. I just added JNJ and more XOM recently. I’m not real excited about JNJ’s value right now but have been wanting it in my portfolio so decided to grab some. I added more XOM because I’m trying to grab stocks I like when they’re down. I read somewhere recently that someone from Exxon-Mobil stated that dividends are a high priority for their company so I’m hoping the increases continue.

  5. I’ve only got 1 of the 4… XOM, and I just opened a position in it last week at $83.88. I’m adding more VERY soon… while it’s in the lower to mid-80’s.

    I’m heavy in tobacco… PM and MO. I’ve also got a pretty big position in KO cost averaged in at $36.

    The drop in oil prices has also allowed me to start a position in CVX, yielding 4.12%!

    JNJ is next on my list… but it’s just tough for me to pay for it at these levels. I’d really like to get it around $85-$90. I want 3% yield or higher.

    • TheOptionRider,

      Thanks for stopping by! I believe this is the first comment you have left on our site. Hopefully there will be more to follow. This may be the long-term investor in me, but I think we have a golden opportunity to capture oil companies at a low valuation. It may take a year or two, but we will hopefully see some nice appreciation when the oil market settles down and returns to the norm. Great pick ups with XOM and CVX, as we both have now initiated in CVX during the month. I stil can’t believe the yield is now over 4%. Seems like a no-brainer to me at the moment.

      Great cost basis in KO. Are you planning on increasing your position at all or will you pass based on your current holdings? Do you see this as a great time to re-up even though the price has appreciated since your last purchase?

      Thanks again for stopping by!

      Bert

      • The only reason I’m not putting money to work in KO right now is because I’m looking to fatten up my other positions. KO is already my 2nd largest holding, behind PM. My objective these past couple months has been to put money to work in CVX and XOM. Now that I’ve done both… my next goal is to build up my MO position. MO has been on such a run over the past year I haven’t been able to add. But now with it pulling back, I’m waiting for a dip to the 200dma to add more.

        So right now KO is just not a priority, however with it yielding more than 3% I’d think this could be as good of time as any to initiate a position.

Leave a Reply

Your email address will not be published. Required fields are marked *