6 Dividend Increases Expected In November 2020


Another month is in the books. We are racing towards the end of 2020 and looking ahead towards 2021. With a new month coming, you know what that means? The next installment in our monthly dividend income summary series. Each month, we predict the expected dividend increases and review last month’s actual results. Let’s jump right in!

Why Do We Care About Dividend Increases?

Dividend increases are the foundation of our financial freedom plan. We are growing our dividend income, which is the easiest form of passive income, to cover our monthly expenses. A key component of this strategy is investing in companies that increase their dividend annually. Why? We want our dividend income stream to grow! After all, who doesn’t?

That is why we are always on the lookout for dividend announcements. We keep a close eye on key announcements whether we own the company or not. It is a practice the two of us love and are always discussing with each other. It helps us identify potentially undervalued dividend stocks to purchase too!

Once we find a potential dividend investment, we use the Dividend Stock Screener to determine if this is a stock to buy. The stock screener uses three simple metrics. The third metric is dividend growth history. Clearly, as you can see, dividend growth matters to us!

Dividend News and Dividend Increases in November 2020

Before looking ahead to the upcoming dividend increases, I like to discuss the actual increases from the previous month. October was once again an exciting month for dividend investors. Quite frankly, all of them are.

Last month, I changed the format of this section. Rather than simply list each dividend increase, I will split the dividend increases into different, self-identified categories. The categories are:

  1. Featured Dividend Increases – This section will summarize the increases for some of the companies listed in last month’s article
  2. Surprise Dividend Increases – This section will cover dividend increases that came out of left field!
  3. The Surprise “No Dividend Increase Announcement” – This section will feature any companies that did not announce a dividend increase as expected
  4. The Best of the Rest – This section will briefly list any remaining dividend increases that have not been covered.

I decided to keep the format once again. Please let me know your feedback and whether or not you like it in the comments section.

Featured Dividend Increases

McDonald’s (NYSE:MCD) – The Golden Arches is the perfect place to start this month’s article. Why? Well, McDonald’s was supposed to announce a dividend increase in October. Much to Lanny’s chagrin, the company’s dividend announcement was delayed by several weeks, despite their reliable and predictable schedule. At the beginning of November, McDonald’s delivered a 3.2% dividend increase to shareholders. It looks like their journey towards becoming a Dividend King is still alive!

Frustratingly, as a shareholder, I don’t know if it was worth the wait. This 3.2% increase was less than half of last year’s 7.7% dividend increase. Further, this was below the company’s 8% 5-year average dividend growth rate. It is better than no dividend increase or a dividend cut, especially in this economic environment. So I won’t complain too much. However, I wish the increase was larger.

AEP (NASDAQ:AEP) – The electric utility based in the great state of Ohio (also the headquarters of the Dividend Diplomats) delivered another consistent dividend increase. This year, AEP announced a 5.7% dividend increase! AEP’s 5-year average dividend growth rate is….5.73%. I told you the dividend increase was right in line with their average.

The consistency makes sense given the industry in which AEP operates. Utility revenues are consistent. Despite a pandemic, people still need electricity to power their everyday lives. Therefore, revenue, earnings, and cash flow were much more stable than other industries, such as restaurants and entertainment.

Visa (NYSE:V) – Visa waited until the final week to announce their dividend increase. Lanny and I were very excited about this dividend increase. We were expecting double-digit dividend increases, in fact. The credit card processor has been on a tear over the last few years, as more individuals transition to cashless transactions. Shockingly, Visa delivered a lower-than-expected dividend increase.

Visa announced a $.02 per share increase in their quarterly dividend. That is only a 6.67% dividend increase. This was below the company’s five-year average dividend growth rate of 20%. That is still greater than inflation; however, I must say, I am a little disappointed in the results.

Surprise Dividend Increases and Announcements

I already discussed McDonald’s earlier in the article, so I won’t mention that stock in this section! This section will cover dividend increase announcements that were a surprise. They could have been a surprise because the announcements were not expected or because they were not included in last month’s article. Either way, the following companies announced dividend increases that I did not anticipate.

AbbVie (NYSE:ABBV) This company has been on an absolute tear in 2020. Still, despite a rising stock price, they are yielding well over 6%. Now, this yield is getting an extra boost. Why? AbbVie snuck in a nice dividend increase before the end of the month. I was caught completely off-guard by the announcement. This was a very nice treat heading into November. AbbVie increased their dividend 10.2%. Cha-Ching!

AbbVie

Avery Dennison (NYSE:AVY) – AVY’s dividend increase was truly a miss on my part. The company consistently announces their dividend increase in October. Thus, I should have included Avery Dennison in my article last month. If I had, AVY’s 6.9% dividend increase would not have been a surprise to me. Like so many other companies in 2020, this was lower than the company’s average dividend growth rate. Their 5-year average dividend growth rate is 10%.

Whirlpool (NYSE:WHR) – Now this was an exciting surprise. Last month, if you recall, I highlighted an exciting trend. Companies that delayed their annual dividend increase announcement began announcing dividend increases once again. It is a strong signal that companies have a better grasp of their financial position and cash flow.

Whirlpool typically announces their dividend in April. This year, the company delayed their dividend increase. You cannot blame the company, as this was in the heart of the pandemic and the shutdown of the economy. Finally, 6 months later, the company finally announced their dividend increase. Whirlpool delivered a 4.17% dividend increase to their shareholders. Fantastic stuff!

Cummins (NYSE:CMI) – Cummins was just like Whirlpool. The company typically announces their dividend increase in July. However, they delayed their dividend increase announcement. It turns out, the delay only lasted one quarter. CMI announced a 2.97% dividend increase. It is great to see so many companies start to announce their dividend increases once again.

The Surprise “No Dividend Increase Announcement”

Iron Mountain (NYSE:IRM) – IRM has not announced a dividend increase yet. In fact, it looks like their earnings release and dividend announcement will be in November 2020.

The Best of the Rest

V.F. Corp. (NYSE:VFC) – V.F. Corp. announced a 2.1% increase in their dividend in October.

Dividend Increases Expected in November 2020

Company #1: Emerson (NYSE:EMR) – First up on our list, Emerson Electric. Emerson is a Dividend King, as the company has increased its dividend for 63 consecutive years. Emerson’s dividend increase streak is unparalleled. That is possibly why I consider Emerson one of my 5 stocks to buy now, always, and forever. While there are many great companies about this diversified industrial company, there is one frustrating part about the company. Emerson’s dividend growth rate is very low. In fact, their five-year average dividend growth rate is 1.3%. That doesn’t even outpace inflation. Unfortunately, in 2020, I doubt the company surprises us with a larger-than-anticipated increase.

EMR Dividend Increase last year – 2.0%

EMR Five-year average DGR – 1.3%

Expected timing of Dividend Increase Announcement – End of the month

Company #2: Hormel (NYSE:HRL) Speaking of Dividend Kings, let’s make our way to a grocery store near you to buy the products of the next up on our expected dividend increases list. This November, we are expecting Hormel to increase their dividend. This Dividend King has increased their dividend for 53 consecutive years. Hormel operates in a sector that performed well during the pandemic, as people stockpiled food and supplies. One thing that jumps out to me about Hormel is that the company has a very clean balance sheet. The company’s debt balances are very low. I wouldn’t be shocked if Hormel’s dividend increase is in the high single-digit percent this year.

HRL Dividend Increase last year – 11%

HRL Five-year average DGR – 13.3%

Expected timing of Dividend Increase Announcement – End of the month

Company #3: McCormick (NYSE:MKC) Another consumer staple that can be found in a grocery store near you. McCormick’s stock price has recovered from their pandemic lows of $120ish per share. Now, MKC is trading at over $180 per share. Fantastic! McCormick has a very consistent dividend track record. Their five-year average dividend growth rate is just over 9%. Last year, McCormick increased their dividend by 8.8%. My expectation is that MKC’s dividend increase is in line with their average. Why not? Right.

MKC Dividend Increase last year – 8.8%

MKC Five-year average DGR – 9.2%

Expected timing of Dividend Increase Announcement – End of the month

Company #4: Sysco (NYSE:SYY) We have all seen the silver trucks driving on the highway or in your neighborhood. If you claim you haven’t, I may have to call you a liar. Their strong presence in the food service sector is a reason why this company is a Dividend Aristocrat. Consistent, growing revenue and net income translate to a growing dividend. It makes sense, right? Sysco had a huge dividend increase last year. I would be shocked if the dividend increase is close to that in 2020.

SYY Dividend Increase last year – 15.4%

SYY Five-year average DGR – 8.5%

Expected timing of Dividend Increase Announcement – Middle of the month

Company #5: ADP (NASDAQ:ADP) – Wow, there are a lot of great high quality dividend growth stocks set to announce a dividend increase this month. ADP is a great company with a strong dividend track record. ADP has developed a product and service that has high switching costs by providing critical services to companies (large and small). Shockingly, I was impressed with ADP’s recent dividend growth history. Last year, they increased their dividend by 15%. This surpassed their 5-year average of 13.3%. It will be fascinating to see what 2020 will bring for ADP’s dividend.

ADP Dividend Increase last year – 15.2%

ADP Five-year average DGR – 13.3%

Expected timing of Dividend Increase Announcement – Middle of the month

Company #6: Nike (NYSE:NKE) – The iconic Nike. “Just Do It.” That’s what Lanny and I are telling Nike for their dividend increase this month. Nike’s dividend yield is very low. In fact, the sub-1% dividend yield is much lower than the S&P 500. Luckily, the company has a strong dividend growth rate. For me, if a company has a low dividend yield, I expect the company to have a strong dividend growth rate. A five-year average dividend growth rate of 13% is pretty strong to me.

NKE Dividend Increase last year – 11.4%

NKE Five-year average DGR – 13%

Expected timing of Dividend Increase Announcement – Middle of the month

Summary

Buckle up. Get ready for another great month of dividend increases. Hopefully, you can share the excitement with us, as each of the six companies announce dividend increases in November. If you were a lucky shareholder of ABBV or one of the other companies that announced an increase, enjoy your extra dividend income. Man, dividend investing is the best! Now, let’s continue saving and investing every dollar we possibly can into income-producing assets. Let’s go.

What dividend increases did you receive in October? What increases are you expecting in November? Were you surprised with any of the increases? Are you disappointed in Visa’s 6.67% dividend increase?

– Bert

Original post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.

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