Expected Dividend Increases for December 2021

As I'm writing this blog post, Thanksgiving Day is right around the corner. The wind chill is in the mid-20s and it's snowing as I'm writing. So much for no snow cover on Thanksgiving like we had a few years ago here in Central Wisconsin.

With that aside, I will discuss the dividend increases that I have received to date. Of note, I'm still expecting a dividend increase from MRK any day now. Thus, I'll be updating this blog post whenever that raise is announced. I'll also be looking ahead to the multitude of dividend increases that I'm expecting next month, which will be the busiest month of this year for raises!

 

Actual Dividend Increases for November 2021

Dividend Increase #1: Simon Property Group (SPG)

The mall, outlet center, and lifestyle center REIT Simon Property Group announced a 10% increase in its quarterly dividend from $1.50 per share to $1.65 per share. SPG's strong recovery from COVID-related headwinds this year is what prompted the stock to raise its dividend for the third time this year. And at the rate the stock is going with its dividend increases, my prediction is that the quarterly dividend could be restored to its pre-COVID level of $2.10 per share potentially by the end of next year.

Across my six shares of SPG, my net annual forward dividends shot $3.60 higher due to the recent dividend increase.

Dividend Increase #2: Main Street Capital (MAIN)

Business development company Main Street Capital declared a 2.4% increase in its monthly dividend from $0.21 per share to $0.215 per share. Like SPG, MAIN has done well operationally due to the economic recovery over the past year-plus. Since MAIN already raised its dividend by 2.4% in August, this is the second raise of the year for shareholders. On top of the increase in the regular dividend, MAIN announced a $0.10 per share supplemental dividend for shareholders to be paid in December of this year.

This announcement boosted my net annual forward dividends by $0.96 across my 16 shares (at the time of the raise as I purchased more a couple of weeks after the dividend increase).

Dividend Increase #3: Pinnacle West Capital (PNW)

Despite the recent decision from the Arizona Corporation Commission (ACC) to cut Pinnacle West Capital's return on equity from 10% to the lowest in the nation among mid to large sized utilities in the U.S. at 8.7%, PNW opted to increase its quarterly dividend by 2.4% from $0.83 per share to $0.85 per share. 

This came in a bit below my revised estimate of a 3.6% increase in the quarterly dividend per share to $0.86, but I'll gladly take this raise from PNW considering the circumstances. 

Across my seven shares of PNW, my net annual forward dividends increased by $0.56 due to the dividend increase.

Dividend Increase #4: Aflac (AFL)

Supplemental insurer Aflac announced a 21.2% increase in its quarterly dividend from $0.33 per share to $0.40 per share. In light of AFL's solid fundamentals and low payout ratio, I'm pleased with the board of directors' decision to hand out a massive dividend hike to shareholders.

This dividend raise boosted my net annual forward dividends by $3.08 across my 11 shares of the stock.

Dividend Increase #5: Realty Income (O)

The single-tenant triple net lease REIT Realty Income declared a 4.2% increase in its monthly dividend from $0.236 per share to $0.246 per share, which like many of the other dividend increases was one that came by surprise in November. But since O's acquisition of VEREIT that recently closed is expected to be more than 10% accretive to its AFFO per share, O is easily able to afford such a dividend increase.

Across my 13 shares of the stock, my net annual forward dividends rose by $1.56 as a result of the dividend bump.

Dividend Increase #6: KeyCorp (KEY)

The Ohio-based regional bank KeyCorp raised its quarterly dividend by 5.4% from $0.185 per share to $0.195 per share, which came in below my expectations considering that this was the first raise from KEY since the onset of COVID. I was expecting a 10.8% increase in the quarterly dividend to $0.205 per share.

But at any rate, I'll gladly take a 5.4% increase from KEY. I'd rather a company be conservative with its dividend increases than overextend itself and eventually have to cut the dividend.

The dividend increase from KEY resulted in an $0.88 climb in my net annual forward dividends across my 22 shares of the stock.

Pending Increase: Merck (MRK)

The one dividend increase that I am still expecting this month that I haven't yet received is from none other than the Big Pharma stock Merck. I'm still anticipating that MRK will announce a 9.2% increase in its quarterly dividend from $0.65 per share to $0.71 per share.

If this dividend increase plays out as I expect, my net annual forward dividends would surge $1.92 across my eight shares of MRK stock.

Expected Dividend Increases for December 2021

Expected Dividend Increase #1: Realty Income (O)

Another dividend increase from O may seem like it's out of the question since it just upped its dividend by quite a bit. But since the increase that us shareholders recently received was the big one for the year and the stock raises its dividend four times a year by smaller amounts, there is still a potential December increase left before the calendar turns to 2022.

Therefore, I'm expecting that O will inch its monthly dividend 0.2% higher from $0.246 per share to $0.2465 per share next month.

Across my 13 shares of O stock, my net annual forward dividends would edge $0.078 higher as a result of such dividend increase.

Expected Dividend Increase #2: W.P. Carey (WPC)

Like O, W.P. Carey is a diversified REIT that raises its dividend in smaller amounts quarter in and quarter out. As the stock gradually divests itself of its investment management business and becomes a pure play REIT, this should help dividend increases to accelerate.

But in the meantime, I'm forecasting that WPC will announce a 0.2% increase in its quarterly dividend from $1.052 per share to $1.054 per share next month.

My net annual forward dividends would grow by $0.056 across my seven shares of the stock if this dividend raise occurs.

Expected Dividend Increase #3: Amgen (AMGN)

The first Big Pharma stock that I'm expecting a dividend increase from in December is Amgen. Because analysts are projecting that AMGN will grow its EPS 7.4% next year to $18.13, I believe that a high-single-digit increase in the quarterly dividend is realistic. That's why I believe AMGN will announce an 8% increase in the quarterly dividend from $1.76 per share to $1.90 per share.

Across my four shares of AMGN stock, this would boost my net annual forward dividends by $2.24 if my prediction is correct.

Dividend Increase #4: Eastman Chemical (EMN)

Advanced materials and specialty additives company Eastman Chemical is next on my list for December dividend increases. Since analysts are forecasting the stock will produce 6.9% growth in its EPS to $9.55 next year, I believe a strong dividend increase is inevitable. Ergo, I'm expecting that EMN will raise its quarterly dividend by 7.2% from $0.69 per share to $0.74 per share.

If my projection is right, my net annual forward dividends would advance by $0.80 across my four shares of the stock.

Dividend Increase #5: Broadcom (AVGO)

The semiconductor company Broadcom is the fifth stock that I'm expecting to announce a dividend hike next month. As a result of analysts' average forecast of 11.2% growth to $31.08 in EPS for next year, I believe that another double-digit dividend increase is in order. That's why I'm forecasting AVGO will raise its quarterly dividend 11.1% from $3.60 per share to $4.00 per share.

Across my three shares of the stock, this would help my net annual forward dividends to surge by $4.80 if my prediction is proven to be accurate.

Dividend Increase #6: Pfizer (PFE)

Yet another Big Pharma stock that I'm anticipating a strong dividend increase from in December is Pfizer. After notching the top-selling COVID vaccine spot for its portfolio, PFE appears to be in line to also be the leader in oral COVID-19 pill treatment space after posting impressive Phase 3 clinical trial results.

This is precisely why I'm expecting the biggest dividend increase from PFE in years. My best guess is that PFE will declare a 10.3% increase in its quarterly dividend from $0.39 per share to $0.43 per share.

If this dividend increase plays out as I expect, my net annual forward dividends will be boosted by $2.72 across my 17 shares of the stock.

Dividend Increase #7: Dominion Energy (D)

The first utility that I'm forecasting will increase its dividend in December is Dominion Energy. Given that analysts are projecting that D's EPS will grow 6.4% next year to $4.13, I believe that a 6.3% increase in the quarterly dividend from $0.63 per share to $0.67 per share will be announced.

My net annual forward dividends would advance by $0.96 across my six shares of the stock if this projection is correct.

Dividend Increase #8: WEC Energy Group (WEC)

The other utility that I believe will raise its dividend next month is WEC Energy Group. Since analysts are forecasting that WEC's EPS will increase by 5.7% next year to $4.30, I believe a similar raise is due. That's why I am expecting WEC will declare a 6.3% increase in its quarterly dividend from $0.6775 per share to $0.72 per share.

Across my seven shares of the stock, my net annual forward dividends would grow by $1.19 if this dividend increase occurs.

Dividend Increase #9: American Tower (AMT)

The wireless communications infrastructure REIT American Tower is another stock that I expect to raise its dividend in December. For those who don't know, AMT raises its dividend each quarter in smaller (if you can really say smaller given AMT's amazing growth prospects) increments. And since the dividend increases announced in December are often the largest of the year, I'm expecting big things from this REIT.

That's why I believe AMT will declare a 4.6% increase in its quarterly dividend from $1.31 to $1.37 per share.

My net annual forward dividends would be boosted by $0.72 across my three shares of the stock if this exact raise is announced by AMT.

Dividend Increase #10: Abbott Laboratories (ABT)

Another dividend increase that I'm anticipating next month is from the diversified healthcare stock Abbott Laboratories. What's especially worth noting is that this next dividend hike from ABT will represent the 50th consecutive annual dividend increase, which will make the stock a revered Dividend King.

I believe that ABT will declare an 8.9% increase in its quarterly dividend from $0.45 to $0.49 per share.

Across my six shares of ABT, this would bring in an extra $0.96 in net annual forward dividends for my portfolio if this prediction is correct.

Dividend Increase #11: Bristol Myers Squibb (BMY)

The last dividend increase that I'm forecasting for December is from Bristol Myers Squibb. 

I believe that BMY will announce an 8.2% increase in its quarterly dividend from $0.49 to $0.53 per share.

My net annual forward dividends would be boosted by $1.60 across my 10 shares of the stock if this dividend increase occurs.

Concluding Thoughts:

Without considering the dividend increase from MRK that should be announced soon, my net annual forward dividends soared $10.64 higher due to the dividend increases that I received in November 2021. This would require $304 in capital to invest at a 3.5% yield to replicate!

If my expected raise from MRK is anywhere near what I expect it will be, November 2021 will be my greatest month in terms of dollar impact of dividend increases in the four-plus years that I have been investing.

And even if my expectations for dividend increases in December 2021 prove to be moderately optimistic, my dividend increases received for the month should set yet another record to close out this year.

Discussion:

How was your November 2021 for dividend increases?

Did you receive any first-time dividend increases as I did with KEY?

I appreciate your readership and welcome your comments in the comment section below!

December 2021 Dividend Stock Watch List

As I'm writing this blog post in mid-November, we just received our first snowfall of the 2021-2022 fall/winter season here in Central Wisconsin. While that does mean I'll be spending less time outdoors as compared to the past six months, the good news is that temperatures have still been tolerable with highs in the upper-30s Fahrenheit. 

With that update aside, I'll delve into the intent of this post by outlining three dividend stocks that I'm strongly considering for next month.

Image Source: Pexels

Dividend Stock #1: Alliant Energy (LNT)

The first dividend stock on my watch list for December is Alliant Energy, which I wrote an updated article on for Seeking Alpha earlier this month for those interested in a more in-depth discussion of why I will be starting a position in the stock.

The first characteristic that drew me to Alliant Energy was its track record of 18 straight years of dividend increases (19 once its 6.2% dividend increase for next year is made formal in January). Alliant Energy's yield of just under 3% isn't particularly eye-popping to income investors, especially considering that its yield is about 15% below the electric utility industry. But with its low payout ratio by utility standards, Alliant Energy will almost certainly become a Dividend Aristocrat in 2028 while delivering annual dividend growth around 7%.

Second, Alliant Energy's financial positioning is relatively strong as well given that its interest coverage ratio in the first nine months of this year is 3.5.

Third, I estimate that Alliant Energy is trading at a reasonable valuation. This is the case even outside of the valuation models that I used in my Seeking Alpha article that demonstrated a slight discount, which are the dividend discount model and the discounted cash flows model.

Based on Alliant Energy's current $55.32 share price (as of November 14, 2021) and its $1.71 dividend payout per share planned for next year, its current 3.1% yield is essentially in line with its 13-year median yield of 3.2%.

Overall, Alliant Energy is a well-run electric and natural gas utility with a great balance sheet priced at a valuation that's a nice fit within my dividend growth stock portfolio.

Dividend Stock #2: Hershey (HSY)

Another stock of interest to me in the weeks ahead that I examined recently on Seeking Alpha is Hershey.

Why am I sold on Hershey?

I would encourage interested readers to check out my article on Seeking Alpha for a more detailed case for Hershey, but it boils down to the following three reasons:

Hershey is a Dividend Contender with 12 years of dividend increases under its belt. And with a dividend payout ratio expected to be in the upper-40 to low-50% range for this year, this leaves plenty of room for future dividend growth. This is further supported by analyst forecasts of 9%+ annual earnings growth over the next five years.

Secondly, similar to Alliant Energy, Hershey boasts a solid financial footing. This is evidenced by an interest coverage ratio that has improved from 10 through the first nine months of last year to nearly 15 year-to-date. In other words, profitability would need to plummet an unprecedented 90%+ or Hershey's interest expenses would need to soar many times over before the company would be at risk of insolvency.

And since I covered Hershey a few weeks ago, a marginally discounted stock has become even cheaper. That's because Hershey's stock has dipped over 2% since my article was published late last month. At $178.49 a share (as of November 14, 2021), the stock is priced at under 24 times next year's forecasted EPS, which isn't unreasonable given its growth potential. 

Hershey is worth every bit of $185 a share in my humble opinion, which opens the door for me to strongly contemplate buying the stock next month.

Dividend Stock #3: American Water Works (AWK)

The final stock on my radar is American Water Works, which I referred to in a Seeking Alpha article earlier this month as an exciting stock in a boring industry.

The key reasons why I am fascinated with AWK are as follows:

First, AWK's estimated dividend payout ratio for this year is the lowest that I've seen in the water utility industry in the mid-50% area. With impressive (for a utility and most industries for that matter) high-single-digit annual earnings growth potential, AWK should easily be able to build on its status as a Dividend Contender with 12 years of dividend raises.

Unsurprisingly, AWK's balance sheet is in an enviable position as well. The utility enjoys an A credit rating from S&P and also produced an interest coverage ratio of 3.5 through the first three quarters of this year.

At $171 a share (as of November 14, 2021), AWK isn't cheap at nearly 38 times next year's average EPS estimate, but a rapidly growing and steady water utility will never be as cheap as the value investor in me would like it to be. After years of overlooking this fact, I have come to accept that while AWK often looks expensive, it's best to dollar cost average into such a wonderful wealth compounder of a stock.

Concluding Thoughts:

As I'm building out my dividend growth stock portfolio, I'm leaning more on the names that I had ignored in favor of more value-oriented stocks through the early years of my investing career. This is demonstrated by the fact that none of the three stocks on my watch list for December are particularly enticing to a value investor.

But on the other hand, all three of the stocks I briefly discussed are of such high quality that they shouldn't rationally be trading at cheap valuations outside of extraordinary circumstances that would probably make other stocks cheaper in comparison anyways.

Discussion:

Are LNT, HSY, and/or AWK on your watch list for next month?

If not, what stocks will you be paying attention to in December 2021?

I appreciate your readership and welcome your comments in the section below!

October 2021 Dividend Income

As I'm writing this blog post, it's Daylight Savings Time here in Wisconsin. That means it will be dark around 5PM and the first snowfall can't be too far off. 

With that aside, I'll delve into the intent of this post. Without further ado, here is my dividend income for October 2021.

Analysis:

During October 2021, I collected $110.57 in net dividends. This works out to a 2.1% quarterly growth rate compared to the $108.30 in net dividends that I received in July 2021. Factoring out the $12.00 in special dividends that I received from T. Rowe Price Group (TROW) in July, my quarterly growth rate would be even higher at 14.8%. And my year-over-year growth rate comes out at 46.1% against the $75.70 in net dividends that I collected in October 2020.

Going into more detail, I received $100.25 in net dividends within my Robinhood portfolio from 20 companies. I collected net dividends of $10.09 from 5 companies in my Webull account. Finally, I received $0.23 in net dividends within my Webull portfolio from 10 companies.

The following activity within my taxable accounts is what led to the $2.27 increase in net dividends from July 2021 to October 2021:

I collected $0.48 in additional dividends from STORE Capital (STOR) across my Robinhood and Webull accounts, which was the result of its recent 6.9% increase in its quarterly dividend.

My net dividends received from Philip Morris International (PM) between my Robinhood and Webull portfolios were $0.65 higher, which was due to its 4.2% dividend increase.

I collected an extra $1.58 in net dividends from Altria Group (MO) across my Robinhood and Webull accounts, which was driven by both my recent addition of a share to my Robinhood portfolio and the 4.7% dividend increase in August.

My net dividends received from Realty Income (O) within my Robinhood portfolio were $0.01 higher due to the stock's recent 0.2% increase in its monthly dividend.

I collected an additional $0.01 in net dividends from W.P. Carey (WPC) in my Robinhood account, which was also due to a recent 0.2% increase in its quarterly dividend.

My net dividends within my Robinhood portfolio from Main Street Capital (MAIN) were $0.08 higher, which was the result of a recent 2.4% increase in its monthly dividend.

I collected an extra $0.12 in net dividends from American Tower (AMT) in my Robinhood account, which was due to a 3.1% increase in the quarterly dividend.

My net dividends within my Robinhood portfolio were boosted by $3.15 from my first dividend received from Medtronic (MDT) in this account, which dates back to when I started a position in the stock in August.

I received $0.08 less in net dividends from GlaxoSmithKline (GSK) in my Robinhood account, which is due to the varying payouts throughout each quarter of the year.

My net dividends within my Robinhood portfolio were boosted by $4.55 due to my first dividend payment from Merck (MRK), which I opened a position in back in August.

I received a $7.56 boost in net dividends from first-time dividend payer VICI Properties (VICI) in my Robinhood account, which was due to my decision to start a position in the stock in September.

My net dividends within my Robinhood portfolio were boosted $4.56 by my first dividend payment received from Kimberly Clark (KMB), which is because I purchased shares of the stock in July.

As I noted earlier, my net dividends were $12.00 lower this month compared to July 2021 due to the special dividend that was paid by TROW in my Robinhood account in July and not paid again in October.

My net dividends received from Simon Property Group (SPG) within my Robinhood portfolio were also $8.40 less in October due to SPG's dividend being paid at the end of September.

Concluding Thoughts:

My net dividends are steadily heading higher, which is an encouraging sign of progress for my portfolio. With more dividend increases down the line and capital to be deployed/reinvested into dividend stocks, I expect that the next four years of the portfolio's progress will more closely resemble a deluge of dividends than a steady stream. This is especially the case now that I'm generating higher net income from my Motley Fool and Seeking Alpha gigs than I was from my day job. 

Discussion:

How was your October 2021 for dividend income?

Did you receive any first-time dividends as I did with MDT, MRK, VICI, and KMB?

As always, I thank you for your readership and welcome your comments below!

October 2021 Dividend Stock Purchases

As I'm writing this blog post, it's the day before Halloween. The typical reader of this blog is pretty mindful of spending. But for any newcomers to the blog or to the concept of financial independence retire early (FIRE), I want to remind everyone of this mind-boggling fact: Saving an extra 2% of your income could potentially shave years off of the time it takes you to achieve financial independence. 

Why do I make this point? Because the average American household allocates over 2% of its budget to holiday spending each year and Halloween is one of the bigger spending holidays. It isn't that you should refrain from spending, but I believe we all can be more mindful of our spending to understand the impact that our spending decisions have on our financial lives.

With that rambling aside, I'd like to turn my attention to the dividend stock purchases that I made during the month of October 2021.

I started off October by opening a position in McDonald's (MCD), which was the result of McDonald's strong balance sheet and reasonable valuation based on my October 2021 dividend stock watch list post. 

I purchased three shares of McDonald's at an average cost of $244.32 a share. This works out to a 2.26% net yield when considering the $16.56 in net annual forward dividends that these transactions added to my portfolio.

I also opened a three share position in Cummins (CMI) last month at a cost of $235.16 a share. Against the $17.40 boost in net annual forward dividends due to these purchases, this equates to a 2.47% net yield.

I added two units of Enterprise Products Partners (EPD) to my portfolio as well at an average cost of $21.67 a unit. This transaction added $3.60 to my net annual forward dividends, which is a net yield of 8.31%.

The other midstream purchase that I made in October was two units of Magellan Midstream Partners (MMP) at an average cost of $45.60 a unit. Based on the $8.22 in net annual forward dividends that were added to my portfolio (prior to the 1% dividend increase in mid-October), this works out to a 9.01% net yield.

I opened a five share position in Omnicom (OMC) in October at an average cost of $72.97 a share, which I also outlined the rationale for in my October 2021 dividend stock watch list post linked above. These purchases added $14.00 to my portfolio in net annual forward dividends, which equates to a 3.84% net yield.

I also added two shares to my stake in American Electric Power (AEP) at an average cost of $84.11 a share. For an explanation of why I added to my position in AEP, I would refer interested readers to my recent Motley Fool article discussing 3 dividend-paying Nasdaq 100 stocks including AEP, Amgen (AMGN), and PepsiCo (PEP). Considering the $5.92 in net annual forward dividends that were added to my portfolio (before the 5.4% dividend increase), this works out to a 3.52% net yield.

I increased my position in Verizon (VZ) by two shares in October at an average cost of $52.03 a share. I explained my logic in a recent Motley Fool article on why Verizon is a buy for readers who are interested. Based on the $5.12 in net annual forward dividends that were added to my portfolio, this is a 4.92% net yield.

Finally, I opened a five share position in Raytheon Technologies (RTX) at an average cost of $89.03 a share. I discussed my reasoning in my October 2021 dividend stock watch list for curious readers. The $10.20 in net annual forward dividends that were added due to my purchase works out to a 2.29% net yield.

Concluding Thoughts:

October 2021 was the fourth straight month in which I put at least $2,000 in capital to work by purchasing some of the greatest businesses in the world. I invested $2,655.24 in capital during the month, which equates to a 3.05% net yield given the $81.02 in net annual forward dividends that these purchases added to my portfolio.

Add in the $6.38 boost to net annual forward dividends through dividend increases received in October 2021 and my net annual forward dividends grew nearly $90 from approximately $2,030 at the start of October to over $2,115 heading into November.

Discussion:

How was your October 2021 for capital deployment?

Did you start any new positions during the month as I did with MCD, CMI, OMC, and RTX?

As usual, I appreciate your readership and welcome your comments in the comment section below!