Apple Among 14 Companies To Announce Dividend Growth In Late April
Summary
- Procter & Gamble extended its dividend growth streak to 67 years in the first two weeks of April with a 3% increase.
- Most of the increases I expected in the first half of April will actually occur in the upcoming week.
- Apple will begin its second decade of dividend growth in the last two weeks of April, along with dividend boosts from IBM and dividend kings Grainger and Sysco.
Apple will announce its next annual dividend increase at the end of April. Chip Somodevilla
This is the latest in my series of articles where I provide predictions of annual dividend increases for a variety of long-term dividend growth companies. At the end of March, I provided predictions for 11 dividend growth companies that have historically announced annual payout increases in the first half of April. In this article I’ll look at another 14 dividend growth companies that I expect will announce their annual dividend increases in the second half of April.
Here are the results from my predictions from the first half of April (as always, the original predictions are available here), followed by my predictions for the dividend increases that I’m expecting to be announced in the second half of April:
(All yields are based on stock prices at the market close on Friday, April 14th.)
Results for Dividend Increase Announcements from First Half of April
Aon plc (AON) – 13 years of dividend growth
Prediction: 9.8 – 11.6% increase to $2.46 - $2.50
Actual: 9.8% increase to $2.46
Forward yield: 0.76%
The insurance broker continued its pattern of 10% dividend growth.
AptarGroup, Inc. (ATR) – 29 years
Prediction: 0 – 2.6% increase to $1.52 - $1.56
Actual: Deferred to the second half of April
The drug delivery company should announce its 30th year of dividend growth around April 18th.
American Water Works Company, Inc. (AWK) – 15 years
Prediction: 6.9 – 9.2% increase to $2.80 - $2.86
Actual: Deferred to the second half of April
American Water Works should announce its latest dividend increase on April 26th, the day before it releases its latest earnings report.
Costco Wholesale Corporation (COST) – 18 years of dividend growth
Prediction: 12.2 – 14.4% increase to $4.04 - $4.12
Actual: Deferred to the second half of April
Costco has traditionally announced its annual boost right around the middle of the month.
H.B. Fuller Company (FUL) – 54 years
Prediction: 9.2 – 13.2% increase to $0.83 - $0.86
Actual: 7.9% increase to $0.82
Forward yield: 1.24%
The specialty chemical company rewarded investors with a good increase, despite not hitting my prediction.
Johnson & Johnson (JNJ) – 61 years
Prediction: 5.3 – 6.6% increase to $4.76 - $4.82
Actual: Deferred to the second half of April
The healthcare company will announce its annual increase during the third week of the month.
Lindsay Corporation (LNN) – 20 years
Prediction: 2.9 – 5.9% increase to $1.40 - $1.44
Actual: 0% increase to $1.36
Forward yield: 1.06%
The infrastructure company decided to defer its annual dividend increase to - hopefully - later in the year.
The Procter & Gamble Company (PG) – 67 years
Prediction: 4.1 – 5.2% increase to $3.80 - $3.84
Actual: 3.0% increase to $3.7628
Forward yield: 2.49%
Procter & Gamble came through with a minimal increase for investors.
The PNC Financial Services Group, Inc. (PNC) – 13 years
Prediction: 10.0 – 12.0% increase to $6.60 - $6.72
Actual: 0% increase to $6.00
Forward yield: 4.92%
It looks as if PNC Bank is deferring its annual dividend increase to later in the year.
The Southern Company (SO) – 21 years
Prediction: 2.9 – 4.4% increase to $2.80 - $2.84
Actual: Deferred to the second half of April
Like J&J above, the electric utility should announce its latest increase in the middle of the third week of April.
The Travelers Companies, Inc. (TRV) – 20 years
Prediction: 4.3 – 6.5% increase to $3.88 - $3.96
Actual: Deferred to the second half of April
The insurer will announce its annual dividend boost when it announces earnings on April 19th.
Predictions of Dividend Increases for the Second Half of April
There are 14 long-term dividend growth companies I expect to announce their annual increases in the second half of April. First, here are my predictions for two featured companies:
Apple Inc. (AAPL) – 10 years of dividend growth
After a gangbusters fiscal 2022 (which ended September 24, 2022), in which sales and earnings grew across every geographical segment except Japan and across all product lines except the iPad line, results in the first quarter of fiscal 2023 reversed a bit. Revenue dropped across all geographical areas and in all but two product segments (iPads and Services), resulting in a 5% drop in net revenues and a 10% drop in EPS, which will put pressure on Apple’s next dividend increase.
Historically, Apple has grown its payout in the double digits. However, dividend growth is slowing at the company with last year’s increase of 4.5% the smallest yet. While still growing its dividend, the company seems to be focusing on share buybacks and has reduced its outstanding shares by 20% since 2018. With last year’s EPS growth of 8.5% and a payout ratio of 15%, Apple has plenty of room for another increase. The only question is how financially conservative will the company choose to be and how much will the company continue to devote to buying back shares. While I do expect Apple to continue to manage its finances wisely and prepare for a possible recession, I think that investors can expect a payout boost slightly higher than last year’s numbers but not returning to the days of 10%+ increases when it announces its next annual increase at the end of the month.
Prediction: 6.5 – 8.7% increase to $0.98 - $1.00
Predicted Forward Yield: 0.59 – 0.61%
Sysco Corporation (SYY) – 53 years
Food services company Sysco has two business segments: one covering the United States and the other covering all international business. In fiscal 2022 (which ended July 2, 2022), both segments saw massive earnings growth, with U. S. sales and earnings up 35% and 31%, respectively. On the international front, sales and earnings were up 41% and 44%, respectively. Adjusted EPS for the entire company more than doubled to $3.25. All of these increases represent Sysco’s ability to pass on rising costs from inflation to its customers.
Moving forward into the first half of fiscal 2023, Sysco continues to show sales and earnings growth – net sales were up 15% and adjusted EPS were up 26% year-over-year. And on top of the more than half century record of dividend growth, Sysco has also bought back nearly 3% of its outstanding shares over the last 5 years.
Historically, Sysco has grown its payout by nearly 6% over the last decade and 8% over the last 5 years. Last year’s increase of 4.3% was below these growth rates, but investors may see faster growth this year. Certainly, the company’s cash flow supports a return to historical growth rates.
Prediction: 6.1 – 9.2% increase to $2.08 - $2.14
Predicted Forward Yield: 2.83 – 2.91%
Here are my predictions for the 12 other companies which should announce annual increases in the second half of the month:
| Company | # Yrs | Industry | Prediction (%) | New Annual Rate |
| Ameriprise Financial, Inc. (AMP) | 17 | Financial - Asset Management | 8.0% - 9.2% | $5.40 - $5.46 |
| Although assets under management were down at the end of 2022 compared with a year earlier, the investment manager continues to buy back shares, causing per share earnings to show an increase of 6% from 2021 to 2022. (Ameriprise has bought back 25% of its outstanding shares since 2018.) Ameriprise should announce a dividend increase around the 5-year average of 8.5%. Predicted Forward Yield: 1.75 - 1.76% | ||||
| Discover Financial Services (DFS) | 12 | Financial - Credit Services | 10.8% - 15.0% | $2.66 - $2.76 |
| The financial institution increased the amount of funds set aside for credit losses, driving EPS to fall by 13% in 2022. This, in spite of continuing to buy back shares – Discover has bought back 21% of outstanding shares over the last 5 years. Discover’s payout ratio below 15% leaves room for another good increase – not quite the 20% investors received last year, but still a double-digit boost. Predicted Forward Yield: 2.63 - 2.73% | ||||
| FactSet Research Systems Inc. (FDS) | 24 | Financial - Financial Data & Stock Exchanges | 9.6% - 12.4% | $3.90 - $4.00 |
| The financial data and analytics firm recently boosted its 2023 EPS guidance. After 20% adjusted EPS growth in 2022, the company is looking at another 9.5% growth in 2023. Investors can look forward to a boost around 10%, slightly higher than last year’s 8.5% increase. Predicted Forward Yield: 0.94 - 0.97% | ||||
| First Financial Bankshares, Inc. (FFIN) | 12 | Banks - Regional | 5.9% - 8.8% | $0.72 - $0.76 |
| After fast earnings growth for the Texas-based bank holding company, 2022 saw growth slow dramatically. With just 3% EPS growth for the full year, First Financial will be hard-pressed to keep up its 10%+ dividend growth. However, with a current payout ratio of 40%, dividend growth probably won’t slow as fast as earnings growth. I expect the company to announce a boost in the mid-single digit percentages. Predicted Forward Yield: 2.47 - 2.61% | ||||
| W.W. Grainger, Inc. (GWW) | 51 | Industrials - Industrial Distribution | 6.4% - 7.6% | $7.32 - $7.42 |
| Things are going well for the distributor of industrial products. The company saw good sales and earnings growth in 2022, with year-over-year sales increases of 17% and EPS growth of 50%. Despite good long-term growth, Grainger tends to compound its dividend at around 6 – 7%. I expect the company to maintain this pattern and to continue to buy back shares. Predicted Forward Yield: 1.12 - 1.14% | ||||
| International Business Machines Corporation (IBM) | 27 | Information Technology Services | 0.6% - 1.2% | $6.64 - $6.68 |
| With cloud revenue up double-digits in 2022, IBM saw adjusted EPS growth of 25% for the year. Despite the growth, investors are likely to see another minimal increase, since the company had a special one-time payment for its pension plan in 2022, which was excluded from adjusted earnings. Predicted Forward Yield: 5.18 - 5.21% | ||||
| Lithia Motors, Inc. (LAD) | 12 | Auto & Truck Dealerships | 9.5% - 15.5% | $1.84 - $1.94 |
| The automotive retailer continues to expand, acquiring 31 car dealerships in 2022 and growing adjusted EPS by 11%. The company has a tiny payout ratio of less than 5%, leaving plenty of room for a good dividend increase. I’m expecting a boost between the 5-year average of 9% and the 10-year average of 16%. Predicted Forward Yield: 0.82 - 0.86% | ||||
| Lakeland Bancorp, Inc. (LBAI) | 12 | Banks - Regional | 5.2% - 6.9% | $0.61 - $0.62 |
| After merging with 1st Constitution Bancorp and then announcing a merger with Provident Financial Services, earnings jumped by 13% at the New Jersey-based bank. However, EPS fell due to the need to issue additional shares for the mergers. With a 35% payout ratio, Lakeland Bancorp’s increase should be close to the company’s 5-year average of 7.6%, but with a slight bias to the downside. Predicted Forward Yield: 4.14 - 4.20% | ||||
| MetLife, Inc. (MET) | 11 | Financial - Insurance | 3.0% - 5.0% | $2.06 - $2.10 |
| MetLife has had 5 straight years of 8-cent annual dividend increases. Investors may see a 6th year, as the insurer saw adjusted EPS fall by 26% - all of which was caused by a drop in investment income in the bear market. With a current payout ratio of 30%, MetLife will be able to easily afford another 8-cent boost, consistent with the company’s 5-year dividend growth average of 4.4%. Predicted Forward Yield: 3.40 - 3.46% | ||||
| Portland General Electric Company (POR) | 16 | Utilities - Electric | 3.9% - 5.0% | $1.88 - $1.90 |
| Like MetLife above, Portland General Electric has a very consistent dividend growth rate over the last 5 years, boosting its payout by 9 cents annually. This has given the company a 5-year growth rate of 5.9%. Will investors see another year of the same? Well, the company’s EPS was up only 1% in 2022 and the payout ratio of 66% is a bit high for continued dividend growth over the long term. But I think the company will keep the pattern going, with a chance of a slightly smaller boost. Predicted Forward Yield: 3.80 - 3.84% | ||||
| Sonoco Products Company (SON) | 40 | Packaging & Containers | 7.1% - 10.2% | $2.10 $2.16 |
| Driven by the acquisition of Ball Metalpack, now named Metal Packaging, Sonoco’s EPS grew by 65% in 2022. Last year’s payout boost of 9% was twice the company’s 5-year dividend growth rate, and investors can expect another good year of dividend growth from the packaging company. Predicted Forward Yield: 3.47 - 3.57% | ||||
| UGI Corporation (UGI) | 35 | Utilities - Gas | 2.8% - 5.6% | $1.48 - $1.52 |
| Although UGI has a compounded dividend growth rate of more than 7% over the last decade, the natural gas utility has announced a long-term dividend growth rate objective of 4% – consistent with last year’s 4.3% boost. Adjusted EPS fell by 2% in the last fiscal year, which would naturally limit dividend growth but UGI’s payout ratio of 50% leaves room for that 4% dividend boost. Predicted Forward Yield: 4.28 - 4.40% | ||||
Summary
I make my predictions based on when companies have announced dividend increases in past years. It’s inexact, as sometimes the announcement dates shift as the calendar moves slightly. This is just a long way of saying that the first couple of weeks of April were quieter than I expected for dividend increases, as several companies pushed their announcements to the third week of April. This will make the last two weeks of April busier than usual.
Investors can expect both Costco and Johnson & Johnson to announce their increases during the week of April 17th. That week and the following week will bring increases from 14 more companies, including the widely held Apple and IBM. Dividend kings Sysco and W. W. Grainger will also announce increases during the latter half of April. And investors in Discover Financial can look forward to a double-digit boost from the financial services company.
Looking back briefly at the first half of the month, both infrastructure company Lindsay Corporation and bank PNC kept their dividend payment level, while Procter & Gamble announced a small 3% increase to extend its dividend growth record to 67 years.
This article was written by
Analyst’s Disclosure: I/we have a beneficial long position in the shares of IBM, PG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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