Tuesday, March 24, 2020

Expected Dividend Increases for April 2020

As I'm writing this post, I just completed my first day of working remotely due to the fact that Wisconsin Governor Tony Evers announced that the state would be enforcing a stay-at-home order. 

While the downside to working from home is that my setup isn't quite as efficient as my setup at work (only one screen at home versus two at work), I do enjoy being able to sleep an extra 30 minutes each weekday over the next month. It's also great because I will be able to save roughly $40 in transportation costs as a result of working from home and I'm able to go for walks in my parent's 48 acre backyard on my lunch break.

With that in mind, I'll be getting to the intent of this post, which is to provide a summary of the dividend increases that I received in March and a preview of the increases that I am expecting in April. 


Increase #1: WP Carey (WPC)

WP Carey announced a 0.2% increase in its quarterly dividend from $1.038/share previously to the new dividend of $1.040/share, which was in line with my expectations.

Across the 3 shares of WPC that I owned at the time of the announcement of the dividend increase, my annual forward dividend income increased by $.024.

Increase #2: Realty Income (O)

Sticking with the theme of consistent REITs in my portfolio that I touched upon in the last post of this series, Realty Income announced a 0.2% increase in its monthly dividend from $0.2325/share previously to the new dividend of $0.2330/share.

Across the 4 shares of O that I owned at the time of the dividend announcement, my annual forward dividend income was boosted by $0.024.

Increase #3: General Dynamics (GD)

General Dynamics announced a 7.8% increase in its quarterly dividend, from $1.02/share to $1.10/share. This was slightly below what I was expecting, although I completely understand why GD elected to be on the conservative side in light of the COVID-19 developments over the past few weeks.

Across the 3 shares of GD that I owned at the time of the dividend announcement, my annual forward dividend income increased by $0.96.

Dividend Freeze: Williams Sonoma (WSM)

The surprise dividend announcement was undoubtedly that of Williams Sonoma's decision to keep its quarterly dividend in line with the previous at $0.48/share.

I label this as a surprise not because I disagree with the move to keep the dividend in line (it's the right move in the wake of COVID-19's multi-faceted impact on our lives), but because at the time that I wrote my previous post, I didn't believe that the impact of the virus would be as profound as it has proven itself to be.

Bonus Dividend Increase: L3Harris Technologies (LHX)

It sure is nice to receive a dividend increase earlier than you were expecting (way back at the end of February and I was expecting it this summer), which is exactly what happened when L3Harris Technologies announced a 13.3% increase in its quarterly dividend, from $0.75/share to $0.85/share. 

Across the 2 shares of LHX that I own, this announcement added $0.80 to my annual forward dividend income.

Expected Dividend Increases in April

Expected Dividend Increase #1: Johnson & Johnson (JNJ)

As a resilient Dividend King, I believe Johnson & Johnson will continue to deliver dividend increases to its shareholders by announcing a 5.3% increase in its quarterly dividend from $0.95/share to $1.00/share. 

Across the 2 shares of JNJ, this would result in a $0.40 boost to my annual forward dividend income.

Expected Dividend Increase #2: Southern Company (SO)

Given that Southern Company operates in an industry that benefits from the rate cut that was recently announced, I expect these benefits to offset the headwinds of more mindful consumption of energy and potential utility rate cuts. 

It's for these reasons that I am anticipating a 3.2% increase in SO's quarterly dividend, taking the dividend from $0.62/share to $0.64/share. 

Across the 5 shares of SO that I own at this time, this announcement would add $0.40 to my annual forward dividend income.

Expected Dividend Increase #3: International Business Machines (IBM)

I'm expecting a slight reduction in International Business Machines' dividend growth this year in light of the COVID-19 developments, so I am forecasting a 2.5% increase in the quarterly dividend, from $1.62/share to $1.66/share.

Across my 4 shares, this announcement would boost my annual forward dividend income by $0.64.

Expected Dividend Freeze: Exxon Mobil (XOM)

Although Exxon Mobil has raised its dividend for 37 consecutive years, I would be very surprised to see XOM increase its dividend this spring given the sudden collapse in crude prices. I would expect XOM to once again announce a $0.87/share quarterly dividend for the next couple of announcements and if crude stabilizes in the month aheads, I could see a dividend increase in October rather than April.

Expected Dividend Freeze: ONEOK (OKE)

As a midstream player, I wouldn't be surprised if ONEOK followed Enterprise Products Partners' (EPD) recent announcement keeping their distribution in line with the previous $0.935/share. In these uncertain times with heightened counter-party risk, I would actually be pleased if OKE announced a temporary dividend freeze until energy prices find support.

Concluding Thoughts:

I was able to add $1.808 to my annual forward dividends with the 3 dividend increases that were announced in March and the LHX announcement that I missed until a couple days ago, which would take $45.20 of fresh capital invested at a 4% yield to replicate.

This April will in all likelihood not come close to the $2.34 in dividend increases that I received in April 2019, but given the circumstances, I would be pleased with any progression in my annual forward dividend income.

Discussion:

Are you expecting the energy sector to announce dividend freezes until the headwinds in the sector ease via a potential deal between Saudi Arabia and Russia, and as our daily lives around the world gradually return to normal? 

How was your March in terms of dividend increases?

As always, I appreciate your readership and welcome any comments that you are free to leave in the comment section below.



2 comments:

  1. In my opinion, I think it’s important to separate the emotions from investing. With the spread of the virus, it is very concerning, no doubt. How the market reacts to news, I can’t control. However, I can control how and when I invest, so I tend to focus on that.

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  2. Darina,

    I share a perspective similar to yours. COVID-19 is undoubtedly deadlier and more contagious than the flu, so it deserves our attention from a public health standpoint, but I find it doubtful that this pandemic will affect corporate earnings over the long-term. Thanks for the comment.

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