We are in the thick of winter here. Snow flurries are flying and temperatures are dropping. The perfect time to sit inside with a warm cup of coffee, blog, and learn about dividend investing Lanny just published an article explaining how dividends are taxed and the tax benefits of this passive income stream. Lower tax rates are just another reason why we love dividend investing. Another reason we love this investing strategy is because of the dividend increases. We monitor each dividend increase like a hawk; we celebrate the strong increases and shake our heads after a disappointing increase. That’s why each month, we publish an article exclusively focusing on the expected dividend increases in the coming month. Here are the expected dividend increases in February.
Before we jump into the dividend increases, we wanted to briefly explain how we build our dividend income streams. We build this income stream by finding undervalued dividend growth stocks that have a history of INCREASING their dividend using the 3 simple metrics of our Dividend Stock Screener. We’re both building the foundations we need, one day and one step at a time. See the foundations here:
- Our Dividend Stock Portfolios showing each individual holding and the dividend income each produces.
- Our Dividend Income page showing each monthly dividend income total.
Actual dividend increases in JAnuary 2020
Let’s start this article off by reviewing the actual dividend increases from last month. We might as well see how the “expected” companies performed this month, right? We forecasted 5 dividend increases in January. Here were the results:
Company #1: Consolidated Edison (ED) – I described Consolidated Edison as “old reliable” last month. Because darn is that company consistent with their dividend increases. It looks like the Dividend Aristocrat loved up to is reputation once again in 2020. The company announced a 3.4% increase in their quarterly dividend. What’s their 5-year average dividend growth rate, you may ask? 3.27%. Consistent, consistent, consistent. Consistency and growth history are two of the reasons why Consolidated Edison earned a spot on our Top 5 Foundation Stocks for a dividend investors portfolio.
Company #2: Kimberly-Clark Corporation (KMB) – I should have known the dividend increase was not going to be great after I looked at the company’s dividend payout ratio last month. While I was not expecting a 10% dividend increase, I was expecting a little more than a 3.8% dividend increase based on the company’s strong 2019. This is in line with their 5-year average dividend growth rate (4.1%). So at least the company is consistent, right?
Company #3: Air Products and Chemicals, Inc (APD) – APD will take the cake for the largest dividend increase last month. APD announced a 15.5% dividend increase. That’s largest than ED, KMB, NSC and INTC’s dividend increases combined! A big congratulations is in line for APD shareholders. Maybe it is time to finally add this Aristocrat to my next watch list.
Company #4 – Norfolk-Southern Corporation (NSC) – This was sadly the most disappointing announcement, or lack of announcement, of the month. I was waiting the entire month for a nice increase. Instead, management threw a curveball at us and announced that NSC’s dividend will remain the same. This has me very curious. Why did management break their semi-annual dividend increase schedule.
Company #5: Intel Corporation (INTC) – Outside of APD, the dividend increases in January have been pretty underwhelming. That includes INTC, which announced a 4.7% dividend increase. Nothing spectacular and definitely below what I was expecting. Interestingly, their stock price soared after their earnings release. So the average dividend increase didn’t seem to move investor sentiment.
Bonus Company #6: Chevron Corporation (CVX) – This was a nice surprise at the end of the month. Chevron announced a strong 8.4% dividend increase. This was great due to the turbulence in the oil sector over the last year. With the prices of oil stocks slumping over the last year, I was not expecting a dividend increase like this. Maybe I’ll add CVX to my next watch list after this dividend increase!
Read: See the impact dividend increases had on Lanny’s dividend income in 2019
Read: The Power of Dividend Re-Investing – Understand how dividend increases and dividend reinvestment are key to achieving Financial Freedom
Expected Dividend Increases in February 2020
I’m a little little down and disappointed after reviewing the dividend increases in January. However, now that we are looking ahead to February, I must say, I’m excited for by the sheer volume of dividend increases that are expected to occur. Here are the expected dividend increases in February:
Company #1: Archer-Daniels Midland (ADM) – ADM actually jumped the gun and announced their dividend increase in January, not February. Interesting that the company decided to fall off schedule here! Unfortunately, this wasn’t an exciting dividend increase. ADM only increased their dividend 2.8%. I guess after the tough year last year due to the trade war, I shouldn’t be surprised with small dividend increase.
Company #2: Coca-Cola Co. (KO) – Next up, a Dividend Aristocrat. Both Soda giants are expected to announce their dividend increase this month. It’s fitting, especially given how the companies will also battle for the best Super Bowl commercial this month. Let’s also take that battle off of the gridiron and put it on each company’s investor relation pages! KO’s dividend increase last year was dismal; so I’m looking to see if KO can recover and deliver shareholders better news in 2020. 2.5% won’t be that high of a hurdle to cross.
Company #3: Genuine Parts Company (GPC) – Genuine Parts Company is a sneaky Dividend Aristocrat. I say that they are sneaky because the company operates in a non-sexy industry like other Aristocrats on this list. But hey, this company has increased their dividend for 63 consecutive years. The company has a yield over 3% and is down over 7% today. Hmm, GPC may have found its way onto my next dividend stock watch list.
Company #4: T. Rowe Price Group (TROW) – TROW price has been one of my best performing investments….ever. The company has zero debt and has taken off over the last five years. Luckily for dividend investors, the company has also increased their dividend in correlation with their stock price. Their 5-year average dividend growth rate is a staggering 24%. You read that right….24%! While I’m not expecting that this year, I am expecting another strong, double-digit dividend increase again in 2020.
Company #5: Walmart (WMT) – Walmart subscribes to the AT&T plan for increasing their dividend. Consistently announce a $.01 per share increase in their quarterly dividend. The only difference is that Walmart’s dividend yield is nowhere near AT&T’s yield! There are no indications that the company will change course and announce a larger increase in 2020. But man would that be a pleasant surprise and a strong boost of confidence for shareholders.
Company #6: Pepsico (PEP) – Pepsi’s dividend increases are always interesting. The company announces their annual dividend increase at the same time they publish their full year earnings results. What’s funny is that the dividend increase, announced in February, won’t be received until June! I’m ready to be surprised here by Pepsi, which only increased their dividend by 3% last year.
Company #7: The Wendy’s Company (WEN) – As a consumer, I love eating at Wendy’s. There is just something about getting a jr. bacon cheeseburger and fries. Man, now I am making myself hungry writing this article! Wendy’s has been on a dividend growth tear over the last few years. The company has recently entered the fast food breakfast wars. The breakfast field is saturated. Wendy’s has to compete with McDonalds, Dunkin Donuts, Starbucks, and others on this front. It will be interesting to see if this decision pays off in the long run.
Company #8: United Parcel Services (UPS) – I grew my position in UPS aggressively and am very happy and comfortable with the amount of the shipping company I own. Their competitor, Fedex, fell after cutting guidance and reporting on the impact Amazon has had on their business. Will this trickle over to UPS? That remains to be seen. However, in the short term, I am expecting a solid dividend increase from UPS. Hopefully they can ship us a nice dividend increase (sorry for the bad joke there)
Company #9: Home Depot, Inc. (HD) – Home Depot had a MONSTER 32% increase in their dividend last year. I’m not expecting anything close to that in 2019. In fact, I’m expecting their dividend to be closer to 10%. But I’d happily split the difference here, and I’m sure shareholders would take that deal everyday!
Company #10: 3M Company (MMM) – This is the last Dividend Aristocrat on the list for the month. It is one of my favorite company’s too; hence, it why I consider it a stock that I will always buy. The company has increased their dividend for over 60 years. This one, like so many, will be fascinating. It has been a roller coaster ride for 3M lately for the company. Their price fell after this last earnings release. The company is cutting jobs, they missed profits, and didn’t have the best outlook. What will be curious though is the company’s dividend increase. I can’t imagine it will be large given this release and the economic environment. But we will find out.
This month is going to be insane, as the dividend increases are going to be coming at us fast and furious. Hopefully, February proves to be a stronger month than January. It will be very, very frustrating if we are facing another year of weak dividend growth. But let’s remain optimistic and focus on the positive. Strong dividend increases will come in February!
What dividend increases are you expecting this month? How many names on this list do you own? Were you frustrated by the poor dividend increases in January? What’s your favorite part of dividend investing?