Expected Dividend Increases in December

2015 is quickly approaching!  Holy smokes.  As the calendar turns for the final time this year, it is time to review which Dividend Aristocrats are expected to announce dividend increases in December.  For all new readers, we have reviewed projected dividend increases at the beginning of each month.  Why? Because the Dividend Diplomats love dividend increases, especially from Aristocrats.  With that being said, let’s review our projections from November and take a look ahead to the final month of 2014!

dividend increases in December

 Dividend Increases in November

Last month was a pretty busy month for Dividend Aristocrats.  Since we started this series in May, November was set to have the largest number of companies announce an increases (by far).  In total, we anticipated 7 companies would announce an increase in November!  Did they deliver?

  1. Automatic Data Processing (ADP)- ADP announced a disappointing dividend increase compared to its recent average annual increase of ~10%.  Last month they announced an increase of its quarterly dividend by only $.01/share.   I am a little surprised by this small increase considering the payout ratio was ~46%, so there was room to grow the dividend by a larger amount.  Maybe next year they will revert back to the average.
  2. Becton, Dickinson & Co (BDX)- Unlike ADP, BDX announced a dividend increase in line with their 3 year average increase of ~10%.  The company increased its quarterly dividend from $.545 to $.600, an increase of 10.1%.  The company’s new payout ratio is only 35%, so there is plenty of room to continue to grow the dividend at this rate going forward.
  3. Brown-Forman Corp B (BF.B)-BF.B is another company that announced a dividend increase in line with their three-year average  of 9.75%.  On November 20th, the company announced an increase of its quarterly dividend by $.025/share, increasing the dividend from $.29/share to $.3150/share; an increase of 8.6%.   Very solid increase for investors.
  4. Emerson Electric Co (EMR)-   Last month, I discussed how I expected a company such as Emerson with a lower yield to have a higher annual dividend increase.  Before last month, EMR averaged an annual dividend increase of only 5.56%.  For once it seemed my gut feeling paid off as EMR announced an increase of its quarterly dividend by $.04/share, or 9.3%, from $.43/share to $.47/share.  A nice surprise for shareholders that have experienced mediocre increases over the last few years.
  5. Hormel Foods Corp (HRL)- HRL continues to deliver stellar dividend increases for its shareholders.  Over the last five years, the company has averaged an annual dividend increase of ~15%.  This year, the company announced an even larger dividend increase as the company increased its quarterly dividend from $.20/share to $.25/share, or 25%! Don’t worry, there is still time to receive this dividend as the ex-dividend date is not until January 15th, 2015.  Congrats to all HRL shareholders!
  6. McCormick & Co (MKC)- Talk about sticking to a trend, MKC once again announced a $.03/share increase of its quarterly dividend.  This now marks the fourth consecutive $.03/share increase.   Unfortunately, the increase of 8% is below the 5 year average of 9% and the percentage will continue to decline if the company maintains this steady increase.   Regardless, 8% is still a solid increase for shareholders!
  7. Sysco (SYY)-  SYY was always a company on my watch list.  I love the companies perceived moat that has been built over the years.  However, as I highlighted last month, the company has a high payout ratio (+70%) and is currently trading at a premium, so I have always passed on the company.  Once again, the company announced a small quarterly dividend increase of $.01/share, bringing the total from $.29/share to $.30/share.   As i mentioned earlier, SYY has always been on my watch list.  However, since the company didn’t pass the Dividend Diplomats Stock Screener due to the high payout ratio and P/E ratio, I did not peel back the layers of the financial statements to determine if I wanted to purchase the company.  It shocked me earlier this week when Dividend Mantra published an article discussing why he sold his shares in the company.  As he points out, the company has had deteriorating financials and the company’s moat (which I perceived to be large) is showing signs of erosion.  Based on his write-up, I am officially removing SYY off of my watch list until the company’s price retreats from its current premium.  I would recommend reading the article to get a great understanding of the company’s current financial situation.

Expected Dividend Increases in December

With November behind us, it is time to take a look ahead to company’s that are expected to announce dividend increases in December.

  1. 3m Co (MMM)- MMM is one of those companies that I would love to have in my portfolio.  In my eyes, I consider the company very similar to PG, in the sense that you can buy, hold, and forget about the stock in your long-term dividend growth portfolio.  I missed a great opportunity to purchase the stock in October when the price decreased to $130, which is $30/share lower than where it is currently trading today!   I will pass on reviewing the 3 and 5 year averages since the averages will be skewed due to the company’s $.21/share quarterly dividend increase last year, which was only a 32.5% increase from the prior period!  While I doubt the company will announce a similar increase this month, the company’s payout ratio is only 43% currently, so there is still room to grow the dividend sizeably.  I can’t wait for the next pullback to hopefully buy shares in the company.
  2. Abbott Laboratories (ABT)- ABT has a history of strong dividend increases, even after the company spun off ABBV in 2013.  While it may look like the company decreased its dividend in 2013, the lower dividend was a result of the spin-off and the adjusted dividend total still resulted in a dividend increase.  Therefore, the leaner ABT still maintained its status as a Dividend Aristocrat.   Last year, the company announced a dividend increase of a 57%!  No, that’s not a typo.  The company increased its quarterly dividend from $.14/share to $.22/share.   This may be my easiest projection since I started the series.  I am going to take a shot in the dark and say ABT will announce a dividend increase less than the 57% increase last year.  Talk about going out on a limb.
  3. AT&T (T)- T is a favorite among the diplomats as both of us have a very nice chunk of the telecom giant in our portfolios.   While the company pays a high yield (currently at 5.2% based on my calculations), it slowly increases its dividend on an annual basis.  Over the last five years, the quarterly dividend has only increased $.01/share.  However, this isn’t an uncommon trend as higher yielding companies tend to increase their dividend less on an annual basis while lower yielding companies will often have higher dividend growth rates.  Want evidence of this, take a look at the yields and growth rates of the first part of the article.   This month I am expecting T to announce another $.01/share increase in its quarterly dividend.  If I am correct, this would increase my projected annual income from T by $2.53 and Lanny’s by $5.69!  Hopefully I am wrong an T surprises me with a larger increase. However, I am not anticipating such a surprise.
  4. Ecolab (ECL)- I must admit, I am not too familiar with Ecolab.  From Ecolab’s profile on Morningstar, “Ecolab, Inc., develops and markets cleaning and sanitizing premium programs, products and services for the hospitality, foodservice, healthcare, industrial and energy markets.”  I’ll quickly run ECL through the Dividend Diplomats Stock Screener. ECL currently yields 1.01%, has a payout ratio of 27.40%, and has a current P/E of 28.  So the company is trading at quite the premium compared to the S&P 500.  ECL has increased its quarterly dividend by an average of 16.2% over the last three years, so ECL falls into the low-yield, high dividend growth category.  Since the company sports a low payout ratio, I would expect an increase along the lines of the three-year average.
  5. Franklin Resources (BEN)-  Currently, the asset management company has a dividend yield of 0.84% (per www.finviz.com) and pays a quarterly dividend of $.12/share.    Last year, BEN increased its quarterly dividend by $.02/share, or 20%!  Prior to the last increase though, the dividend growth rate was lower as the company slowly marched the quarterly dividend up from $.083/share to $.10 (Note: I am excluding all special capital distributions by the company).   With a low payout ratio, 12.6%, I would expect a nice increase to be announced.  We shall see!
  6. Nucor (NUE)- The steel product manufacturer has a current dividend yield of 2.76% and with a payout ratio of  70.4%.  Historically, the company has had a dismal dividend growth rate and has increased its quarterly dividend by less than 1%!  The high payout ratio does not leave the company with a lot of room to grow its dividend going forward, so I would not anticipate a surprise increase to be announced.  My guess is the company will once again announce a $.0025/share, or <1%, increase in its quarterly dividend.

That concludes our listing for 2014.  It has been a fun year preparing this list and learning about all the Dividend Aristocrats!  Will you benefit from any of the dividend increases in December?  Did you benefit from any dividend increases in November from non-Dividend Aristocrats? We look forward to hearing your responses!

-The Dividend Diplomats

 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

20 thoughts on “Expected Dividend Increases in December

    • Jay,

      I am pulling for one. Hopefully it will be greater than the $.01/share increase of the past. Even if it is the same, I’ll still be happy. Like you, T is a large holding in both my portfolio and Lanny’s; so an increase will have a major impact on all of our projected dividend income. They usually announce it in the late teens of December, so we will still have to wait a few weeks to know the fate of the dividend. Did you have any other holdings from the list?

      Thanks for stopping by.

      Bert

    • Henry,

      Haha No kidding! The article took a while to complete this month. But I loved every minute of it. The last two months have been very active for Dividend Aristocrats as almost a quarter of the list has announced increases in November and December. So a lot of people will benefit and see their projected income increase before 2015! One day I hope to own several companies on the list since I only own 1 of the 13 companies listed in the article (T). Will you benefit from any dividend increases this month?

      As always, thanks for stopping by!

      Bert

  1. DD,
    I am with you with MMM, I wanted to own it so bad and missed the boat at $130 last October dip. That one stock alone can get a diversified position such as GE. They operate in not just one sector and yet they are like PG, it has its strength and economic moat that you can invest then kinda forget with minimal homework to do. ATT is one of my largest position, with high yielding stocks comes low growth. Hopefully they surprise us this Christmas than just a penny increase since their EPS growth had been solid lately with a payout ratio of just 56%. Telecoms are known to have a higher payout ratio thus slower growth rate.
    Take care,
    FFF

    • FFF,

      Thanks for stopping by. 3M’s product portfolio is insane. Just from your knowledge of consumer products you might assume the company is predominately healthcare focused, but the company is involved in so many other industries. I know we missed an opportunity a few months ago, but there will be other chances down the road. For me, the key is going to be looking beyond other discounts in the market to pick up shares of a less discounted 3M. It’ll be hard, but that is why it is important to build your watch list early and perform your research ahead of time. It doesn’t sound like either of us are going to pass up the next opportunity we get!

      I hope you are right about T. While I would love the increase, I am not banking on it. It looks like next year’s estimated EPS is either going to decrease or barely increase (depending on which estimate you review), so I can’t picture the company handcuffing themselves by announcing too large of a dividend. But the one thing I feel comfortable projecting is that they are not going to jeopardize their label of a Dividend Aristocrat!.

      Thanks for stopping by. Hopefully we will both be fellow shareholders of 3M soon.

      Bert

  2. Bert,

    Thanks for the list!

    Some of those raises are solid. HRL and BDX are a couple of great companies that I’ve missed out on. Just can’t buy them all.

    I’ve looked at ECL in the past. Great business. The valuation hasn’t been there for me, but solid stuff.

    Best regards!

    • DM,

      Thanks for stopping by. I wish we all had enough capital to invest in every company I include on these lists. We would have a pretty impressive dividend growth portfolio! Unfortunately, we have to pick and choose our investments resulting. Luckily, Mr. Market has a knack for creating several great buying opportunities each year, so there will be other chances to invest in the HRL and BDX’s of the world. That has been the best aspect of becoming active in this community. We all are on the look out for undervalued dividend growth stocks, so the odds of us finding the opportunity to invest in HRL and BDX when they suddenly drop is much greater than if we invested in a vacuum.

      I agree about ECL’s overvaluation. Even with their tough week, they still are over-valued. It just doesn’t make sense to invest in them when their are many dividend growth stocks trading at a greater discount.

      Thanks again for stopping by.

      Bert

  3. Where did the year go?! I can’t believe 2015 is less than a month away.

    Thanks for this list. I’m hoping T announces a bigger raise, but I’m not expecting much, given the numbers. Oh well. A pay raise is a pay raise!

    • I know! 2014 flew by. I feel like it was the 4th of July a few weeks ago! I’m with you. A raise is a raise, regardless of the percentage. A low dividend growth rate is a fact we accepted when we decided to invest in T. But that doesn’t mean we can’t hope for a larger than expected increase, right?

      Thanks for stopping by!

      Bert

  4. Bert,

    Thanks for compiling and sharing this list! Always nice to see one of your holdings make such a list. I’m also looking forward to a dividend increase from AT&T. I guess we’ll know in a couple of days!

    Cheers,
    NMW

Leave a Reply

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