With one of the best known brands in the world, Nike will increase its dividend growth streak to 23 years with its next boost in the second half of November.
This is the latest in my series of articles where I provide predictions of annual dividend increases for long-term dividend growth companies. At the end of October, I provided predictions for 13 dividend growth companies that have historically announced annual payout increases in the first half of November. In this article I’ll look at another 13 dividend growth companies that I expect will announce their annual dividend increases in the second half of November.
Here are the results from my predictions from the first half of November (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 November. I’ve changed how I’m presenting these results to a table. Feedback is welcome – let me know if you find this easier to read.
(All yields are based on stock prices at the market close on Friday, November 10th.)
Results for Dividend Increase Announcements from the First Half of November
| Company | # Years | Prediction % / Annual Rate | Actual % / Annual Rate | Forward Yield |
| Automatic Data Processing, Inc. (ADP) | 49 |
13.0% – 16.0% $5.65 – $5.80 |
12.0% $5.60 |
2.45% |
| Assurant, Inc. (AIZ) | 20 |
4.3% – 7.1% $2.92 – $3.00 |
2.9% $2.88 |
1.77% |
| Atmos Energy Corporation (ATO) | 40 |
6.8% – 8.1% $3.16 – $3.20 |
8.8% $3.22 |
2.89% |
| Becton, Dickinson and Company (BDX) | 52 |
4.9% – 6.6% $3.82 – $3.88 |
4.4% $3.80 |
1.62% |
| Cencora, Inc. (COR) | 20 |
4.1% – 7.2% $2.02 – $2.08 |
5.2% $2.04 |
1.03% |
| Emerson Electric Co. (EMR) | 67 |
1.0% – 1.9% $2.10 – $2.12 |
1.0% $2.10 |
2.43% |
| Evergy, Inc. (EVRG) | 21 |
3.7% – 5.3% $2.54 – $2.58 |
4.9% $2.57 |
5.20% |
| Huntington Ingalls Industries, Inc. (HII) | 12 |
4.0% – 5.2% $5.16 – $5.22 |
4.8% $5.20 |
2.26% |
| HP Inc. (HPQ) | 15 |
2.9% – 4.8% $1.08 – $1.10 |
5.0% $1.1024 |
3.99% |
| Lancaster Colony Corporation (LANC) | 62 |
5.9% – 8.2% $3.60 – $3.68 |
5.9% $3.60 |
2.15% |
| Nelnet, Inc. (NNI) | 10 |
5.8% – 7.7% $1.10 – $1.12 |
7.7% $1.12 |
1.31% |
| Roper Technologies, Inc. (ROP) | 31 |
13.6% – 15.8% $3.10 – $3.16 |
9.9% $3.00 |
0.58% |
| Snap-on Incorporated (SNA) | 15 |
13.5% – 14.8% $7.36 – $7.44 |
14.8% $7.44 |
2.76% |
Predictions for Dividend Increases for the Second Half of November
There are 13 long-term dividend growth companies I expect to announce their annual increases in October. First, here are my predictions for two featured companies:
Merck & Co., Inc. (MRK) – 13 years of dividend growth
Widely held Merck is one of the best-known drug manufacturers in the world. The company operates two business segments: Pharmaceutical and Animal Health. Two of the most popular drugs that are coming out of the Pharmaceutical segment and which are powering company sales are the cancer drug KEYTRUDA and HPV vaccine GARDASIL. Sales for both of these drugs jumped more than 20% in 2022 and contributed to Merck’s 22% jump in sales from 2021 to 2022 and which, in turn, drove adjusted EPS growth to 40% last year.
In addition to organically developing new drugs, Merck is continually acquiring companies with desired drug pipelines and partnering with other companies to collaborate on drug development. While this may seem obvious, I bring it up because Merck is guiding 2023 EPS to be dramatically lower than 2022’s EPS. Between acquisitions of two companies and one-time upfront payments to two other companies, 2023 EPS will be down 70% year-over-year.
Regardless of the drop in EPS, Merck’s business continues to expand and the company will continue its dividend growth record for the foreseeable future. Although Merck’s next increase won’t match its 5-year growth rate of 8%, investors can expect an increase in the 5% range, similar to last year’s.
Prediction: 4.1 – 6.2% increase to $3.04 – $3.10
Predicted Forward Yield: 3.00 – 3.06%
NIKE, Inc. (NKE) – 22 years
I barely have to explain what Nike does – the company has promoted its brand so effectively that the “swoosh” speaks for itself. Nike is known worldwide as the premier athletic sportswear company. In addition to the Nike brand, the company also owns the Jordan Brand of athletic shoes and has a fully-owned subsidiary, Converse. The company not only licenses its brands but also operates Nike retail stores and sells through its website via its NIKE Direct operations.
The company has built an excellent dividend growth history. Over the last decade, Nike has compounded its dividend at nearly 13%, more than tripling its payout over that time. And last year’s 11.5% increase was right in line with the company’s 5-year compounded growth rate of 11.2%.
The company also invests its free cash flow in share buybacks and has retired 60 million shares in the last 5 quarters.
Fiscal 2023, which ended May 31st, brought some challenges for Nike. While revenues were up 10%, powered by 14% growth in the company’s wholesaling and direct-to-consumer businesses, selling and other administrative expenses rose by 11%, more than offsetting the revenue gains. Per share earnings fell 15%, in a rare setback for the company. And fiscal 2024 looks to be more of the same – although revenues were up 2% year-over-year in the first quarter, marketing and other advertising costs rose by 5%, limiting EPS growth to 1%.
Will the company reward investors with another 10%+ boost this year? Nike has some flexibility, and could reduce the amount of shares it retires to maintain the dividend growth rate. The company’s earnings last fell in 2020 and at the time Nike continued to boost its payout by double-digits. I think that’s likely to happen again. Investors should see an increase like last year’s, in the 10 – 12% range.
Prediction: 10.3 – 13.2% increase to $1.50 – $1.54
Predicted Forward Yield: 1.41 – 1.45%
Here are my predictions for the 11 other companies which should announce annual increases in the second half of November:
| Company | # Years | Industry | Prediction (%) | New Annual Rate |
| Agilent Technologies, Inc. (A) | 12 | Healthcare – Diagnostics & Research | 11.1% – 13.3% | $1.00 – $1.02 |
| The healthcare diagnostics company increased its payout last year by 7%, well below its 5-year average growth rate of 16%. Will Agilent return to its usual dividend growth rate this year? Well, sales were up 8% in 2022, which drove EPS growth of 20%. But the company is expecting EPS growth to slow to 4% in 2023. I expect that the company will return to 10%+ dividend growth, but it won’t be 16% – just an increase in the low teens. Predicted Forward Yield: 0.92 – 0.94% | ||||
| American Equity Investment Life Holding Company (AEL) | 19 | Financial – Insurance | 5.6% – 11.1% | $0.38 – $0.40 |
| American Equity provides annuities and other retirement products to its customers. After falling 6% in 2022, adjusted EPS has more than doubled year-over-year in the first 9 months of 2023. In most cases, I would expect a company that is doubling earnings to announce a very nice dividend increase but American Equity has boosted its dividend by 2 cents in each of the last 9 years. I expect the company will continue the pattern, with the chance of a slightly larger boost. Predicted Forward Yield: 0.71 – 0.74% | ||||
| Brown-Forman Corporation (BF.B) | 39 | Beverages – Wineries & Distilleries | 4.0% – 7.0% | $0.85 – $0.882 |
| Distilled spirits company Brown-Forman owns many brands, including the well-known Jack Daniels whiskey. Although the company is expecting sales and operating income growth in the mid-single digits in fiscal 2024 – which started on May 1st – EPS fell by 6% in 2023. So, although Brown-Forman’s dividend boost last year was more than 9%, investors will see a boost closer to the company’s long-term growth rate in the mid-single digits. Predicted Forward Yield: 1.50 – 1.55% | ||||
| CubeSmart (CUBE) | 14 | REIT – Industrial | 13.3% – 16.3% | $2.22 – $2.28 |
| The self-storage REIT continues to expand through acquisitions and new developments. The company also runs a property management service that it provides to third parties, which is also taking on new customers. CubeSmart has regularly boosted its payout by double-digit percentages and, although the company is expecting growth to slow to 6% in 2023, last year the company posted 20% growth. This will set up investors for another increase in the mid-teens. Predicted Forward Yield: 6.09 – 6.26% | ||||
| Hormel Foods Corporation (HRL) | 57 | Consumer – Packaged Foods | 3.6% – 5.4% | $1.14 – $1.16 |
| Food company Hormel has done a good job growing its sales and earnings since 2020, but is expecting a slowdown in the 4th quarter this year which will cause adjusted EPS to fall 10% from 2022. Dividend growth had been slowing, falling to 6% last year from an average of 13% over the last decade. The falling earnings will cause dividend growth to slow even further. Predicted Forward Yield: 3.51 – 3.57% | ||||
| Matthews International Corporation (MATW) | 28 | Industrials – Conglomerates | 2.2% – 4.3% | $0.94 – $0.96 |
| Matthews International provides memorialization products and branding products. The company took an earnings hit in 2022 due to the costs of converting its employees away from its pension plan, along with finishing the writing down of assets due to the Russia-Ukraine war. Free cash flow is coming back in 2023 and is expected to return to 2021 levels. Given this, investors can expect another year – the company’s 6th consecutive one – of an annual boost of 2 or 4 cents. Predicted Forward Yield: 2.52 – 2.57% | ||||
| McCormick & Company, Incorporated (MKC) | 24 | Consumer – Packaged Foods | 2.6% – 6.4% | $1.60 – $1.66 |
| Flavor and spices company McCormick went through some rocky times last year, as issues with its supply chains, Covid in China, and the Russia – Ukraine war resulted in a 17% drop in EPS. These issues seem to be in the past and the company is expecting EPS to grow 5% in 2023. While this won’t be enough to return the company back to the traditional dividend growth rate of 9%, it should be enough for another 5% increase like last year. Predicted Forward Yield: 2.46 – 2.56% | ||||
| Motorola Solutions, Inc. (MSI) | 12 | Technology – Communications Equipment | 11.4% – 13.6% | $3.92 – $4.00 |
| Motorola Solutions provides support for radio communications, video, and command center development for security applications. The company grew EPS by 13% in 2022 and is looking at another 12% – 13% growth in 2023. This EPS growth supports Motorola Solutions’ compounded dividend growth rate of 13%; investors can look for another year of dividend growth in the low-double digit percentages. Predicted Forward Yield: 1.26 – 1.29% | ||||
| Royal Gold, Inc. (RGLD) | 22 | Materials – Gold | 2.7% – 5.3% | $1.54 – $1.58 |
| With lower precious metals production out of Royal Gold’s properties, earnings are falling. EPS was down 13% in 2022 and another 4% in the first 9 months of 2023. So, despite a nice 7% increase last year, investors likely won’t see anything higher than a 5% hike this year. Predicted Forward Yield: 1.44 – 1.47% | ||||
| Spire Inc. (SR) | 20 | Utilities – Gas | 4.2% – 5.6% | $3.00 – $3.04 |
| Spire is a natural gas company serving customers in Alabama, Mississippi and Missouri. The company has a consistent record of 5 – 6% dividend growth. In fact, it maintained this pattern in the face of a 20% drop in EPS last year. With earnings expected to rebound by 6% when the company reports full year financials in mid-November, investors can expect the pattern to continue. Predicted Forward Yield: 5.27 – 5.34% | ||||
| The York Water Company (YORW) | 26 | Utilities – Water | 3.7% – 4.9% | $0.84 – $0.85 |
| The Pennsylvania-based water utility got approval for a rate increase earlier this year, which led to an 18% jump in EPS for the first 9 months of 2023, on top of a 7.7% increase in 2022. Share count has increased, however, and the company has a decent debt load, meaning that York Water is likely to hold to its longer-term pattern of 4% dividend growth. Predicted Forward Yield: 2.30 – 2.33% | ||||
Summary
Many companies use November to announce their annual dividend increases and this year is no exception. The first half of the month saw some nice increases from a variety of companies, including double-digit boosts from ADP and Snap-on Tools. Roper Technologies just missed the 10% threshold with a 9.9% increase to end its third decade of dividend growth. Utility Atmos Energy came in with another year of 8 – 9% growth. And there were three dividend kings – companies with at least half a century of dividend growth on the list for early November: food company Lancaster Colony began its 7th decade of dividend growth with a 6% increase, healthcare company Becton, Dickinson extended its dividend growth history to 52 years with a 4.4% increase, and Emerson extended its streak to 67 years with a small 1% increase.
The second half of November brings another 13 companies that will announce increases, most of them before Thanksgiving. Double-digit boosts should come from sportswear company Nike, communications company Motorola Solutions, REIT CubeSmart, and healthcare diagnostics company Agilent. Dividend king Hormel Foods should extend its streak to 58 years with a mid-single digit boost, while utilities York Water and Spire Energy come in with mid-single digit increases.
As we approach the holiday season, I want to wish all my American readers a happy and enjoyable Thanksgiving!
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