We are coming off of a pretty active month in February. I have been tracking Dividend Aristocrats that are expected to announce a dividend increase each month since May 2014, and February set a record as 8 companies were expected to announce an increase. While March won’t pack the same punch with announced increases, it is the most active month in the quarter for receiving dividends! Time to dive into the details, which Aristocrats are expected to announce dividend increases in March?
Dividend Increases in February
As I mentioned earlier, February was a record-setting month. Eight companies were set to announce a dividend increase, and many of them were household names that many dividend growth investors own. Did the companies meet their expectations? Did they decide to follow through and reward their shareholders?
- Archer-Daniels-Midland Co (ADM) – As I mentioned last month, ADM is a low yield, high dividend growth company that has averaged a dividend increase of 14.75% over the last three years. The great news is that the average is going to increase as the company announced a 16.67% dividend increase this month, increasing their quarterly dividend by $.04/share to $.28/share. A great increase for a company that has had a rough start to 2015, down 6.85%. A large dividend increase, a yield over the S&P 500, a PE ratio lower than the market, and a stock that is actually down YTD in this market. This company aces the Dividend Diplomats’ stock screener and is forcing its way onto my watch list going forward.
- Bemis Co Inc (BMS)– BMS continued its trend of announcing a $.01/share increase in its quarterly dividend this month. Disappointing in my eyes as BMS has a lower yield, 2.32%, than I would expect for a company with small annual increases. For this kind of growth, I will continue to allocate my shares to T and receive the extra 3% in dividend yield annually.
- Chubb Corp (CB)– To be determined. CB waits until the last possible moment in February to announce a dividend increase. Since I am writing this article during the final week of the month, CB still has not announced an increase. But don’t worry shareholders, I would expect to hear some great news by the end of the week! Hopefully they continue their high dividend growth trend.
- Coca-Cola Co (KO) – As mentioned last month, KO has averaged an annual dividend increase of ~9% over the last three years. This year, the company stuck to the trend as KO announced an increase of 8.2% last week. This increase surprised me considering the headwinds the company has faced recently, as KO announced that 2015 was going to be a transition year for the company. Once that was announced, I assumed the dividend increase would be lower than expected as it seemed the company was setting the table for bad news. However, this was a pleasant surprise. I have contemplated adding KO as a long-term, Dog of the Dow play. I am sure this thought will continue and more intense research will ensue if the stock continues to face downward pressure throughout the year. Lanny is probably rolling his eyes and shaking his head at me after reading this as he is a long-time PEP shareholder.
- Genuine Parts (GPC)- As mentioned last month, GPC has averaged an annual dividend increase of 9% over the last three years. However, this year, GPC announced an increase of $.04/share quarterly, which is only a 7% increase. Even though the increase was below the average, it is still greater than inflation, which is great news for investors. The stock is still a little expensive for my liking, as the PE of ~21 is greater than the S&P 500. But if GPC continues to slide, I will likely pick up shares as I think they are the market leader in a great industry.. GPC operates in the secondary car parts industry, which is especially attractive to me as consumers continue to look for ways to reduce expenses (You can even ask Lanny about how expensive car repairs can get).
- Kimberly-Clark (KMB)– Wow, another company that has come in under its three-year average. KMB only announced an increase of 4.7% this year, which is below their three-year mark of 6.3%. Even though I love consumer companies that are found in every household, I am going to pass on watching KMB in the short-term as the company has a high PE ratio and a dividend growth rate that is now significantly lower than my current portfolio’s weighted average growth rate (Read more about why we believe the weighted average growth rate is such a crucial metric to monitor).
- T. Rowe Price Group (TROW)- Holy cow, I had to stop myself from logging into Sharebuilder and initiating a position in TROW after reviewing their dividend increase. Not only did TROW announce an 18% increase in their regular dividend, but they announced a $2/share special dividend on top of that. That is right, a $2/share increase for a stock currently trading at ~$83.50. For those of you interested, that represents a 2.4% gain by itself. Don’t worry, we still have time as the ex-dividend date for both the regular and special dividend are March 12th and April 17th, respectively. I’ll be keeping a close eye on this stock, that’s for sure.
- Wal-Mart Stores (WMT)- Last, but definitely not least, Wal-Mart. WMT was all over the headlines last week, as the company announced a wage hike for employees. Great news for the current employees, and one that will continue to draw media attention for different reasons. However, what I was really focused on was the news regarding WMT’s dividend. Buried within the highly publicized wage increase was the fact that WMT barely moved the needle with their dividend, increasing their annual dividend by $.01/share quarterly, or 2%. I’m shocked by how quickly the rate in which WMT grew its dividend has slowed over the last couple of years, as this now represents the second year in a row that WMT has only increase its quarterly dividend $.01/share. So for now, I am going to leave the large retailer off of my watch list and focus my attention elsewhere.
Expected Dividend Increases in March
I told you February was a record-setting month. Man were there a lot of dividend increases to review. Now it is time to stop looking back and start looking forward to what March is set to bring us. Sadly, we lost one stock that should be included on this list as it was announced that Family Dollar will be acquired. So now, March is only expected to see two Dividend Aristocrats announced a dividend increase. Do you own either of these companies?
- Air Products & Chemicals Inc (APD)– I am not too familiar with APD, but man has the company had a great year! Over the last 52 weeks, the company’s stock price has increased over 37%. APD is a low yield, high dividend growth stock as the company has a current yield of 1.9% and a three-year average growth rate of 9.9%. Due to the high PE ratio, a result of the remarkable build up over the last year, I will not be adding this company to my watch list any time soon. However, I am excited to see what exactly APD will do this year considering their very strong performance. Will they announce a very large dividend increase or a large share-buyback program to keep the positive momentum going?
- Colgate-Palmolive (CL)– Well, CL jumped the gun on their dividend increase this month and actually announced their dividend early in February this year! So let’s take a look at their dividend announcement. CL announced a dividend increase of $.02/share quarterly, or a 5.5% increase. This is below their three-year average of 7.5% but is in line with their increase from the prior year, 5.8%. What’s exciting with the announcement is that the dividend increase was also coupled with a $5b share buyback program. So even though the dividend increase was below their recent average, the company has found other ways to reward their shareholders. Congrats on the great, early news CL shareholders!
Do you own any of the companies on the list? What did you think about the many increases announced in February? Were you disappointed by the results at all, especially from some of the larger companies? Thanks for stopping by, I am looking forward to your comments!
-Bert