Hey everyone. It’s that time again, to guess which companies will announce a Dividend Increase! As a dividend growth investor, I enjoy seeing which companies increase their dividend and attempting to guess the announced increase. As we approach the final business week of the month, we will project which Dividend Aristocrats will announce a dividend increase in July based on their dividend history.
Summary of June Projections
Last month, we published our first article projecting which Dividend Aristocrats would announce an increase in their dividend payment (We used the Wikipedia list of companies that are considered Dividend Aristocrats for our monthly series). In the article, we projected three companies would increase their dividend and 22 days into June, I can gladly say that each company did in fact announce an increase! Here is a brief recap of each company’s dividend increase. increases are as follows:
- Target (TGT) announced a 21% increase. The recent pullback in the stock, the announcement of the increase, and a stock analysis led one Diplomat to initiate a position in the retail giant. Read more about his purchase of TGT here.
- CR Bard Inc. (BCR) announced a 4.7% increase.
- Medtronic (MDT) announced a 8.9& increase.
Pretty nice increases, right? All three companies increased their dividend at a rate greater than inflation, which is something I always consider when researching a new DGI stock. The raise I found the most interesting was Target’s. The company has many reasons to maintain their current dividend or announce a lesser increase; however, the new management decided to stay the course and continue their streak of ~20% dividend increase annually. For MDT and BCR, the companies announced dividend increases that are in line with recent years. MDT continued their trend of increasing their dividend by $.02-$.025 cents per share (over the last 5 years) and BCR continued their annual $.01 increase. While the increases were much more low-key than Target’s, the company’s continue to show why they earned the label “Dividend Aristocrat.”
Expected Increases in July
Similar to June, only a handful of companies have historically announced their dividend increases in July. Based on our analysis, we will expect the following companies to increase their dividend in July. In addition, to add a wrinkle to this guessing game, I will take my best guess at projecting how large the increase will be! Don’t hold it against me if I am wrong, it is all in good fun. As always, the final decision will rest in management’s hands.
1. Stanley Black & Decker (SWK). Okay, SWK has had an interesting stretch of dividend increases. From 2010 – 2013, the stock increased the dividend from $.34 – $.50 and only increased the dividend three times. Interestingly enough, the last dividend increase was a small $.01 to increase the dividend per share from $.49 to $.50 per share. Due to this, I will forgoe projecting a dividend increase due to the large swings in the total dividend increase from year to year.
2. Walgreens Co. (WAG). Unlike SBW, WAG only increase their dividend once a year. The company has had some pretty solid increases in the past, averaging an increase of about 23% each year over the last five years. Even with the stong increases, increase that large are difficult to maintain over the long-run and in the last year, the company only increased their dividend by 14.5%. Thus, when setting my expectations, I will expect the increase to be slightly below the 5 year average to factor in the prior periods decrease. I predict that WAG’s will increase their dividend by 19.05%, or $.06/share.
Again, these projections are all fun and games. I am in no way creating an expectations that investors should use in their independent financial decisions. Let’s see how close I can get to the company’s actual increases in the upcoming months.
~Bert