Tuesday, October 27, 2020

Expected Dividend Increase for November 2020

As I'm writing this blog post, we're just a couple months away from the year coming to a close. I've indicated it before in past blog posts and I will again: the speed with which this year is passing us by has not and will not cease to amaze me.

Since the only dividend increase that I'm expecting in my whole share portfolio during November is Iron Mountain and the dividend increase that I'm expecting from Hormel Foods (HRL) will be statistically insignificant, this blog post will be more of an update on dividend increases that were received in October from Visa and AbbVie, as well as the distribution cut from Energy Transfer.

Pending Dividend Increases/Expected Dividend Increases for October/Surprise Distribution Cut

Pending Increase #1: Visa (V)

I will reiterate my thoughts pertaining to Visa's (V) upcoming dividend announcement once again just as I did in my previous post of the series, which is that I'm expecting a 10.0% increase in V's quarterly dividend from $0.30/share to $0.33/share when V reports its earnings on Wednesday.

Even though this year has been difficult as a result of COVID-19 due to business closures and travel restrictions, the fact that V has plenty of room with regard to its payout ratio leaves me confident that although we won't see nearly as strong of a dividend increase as last year's 20% increase, V will still deliver a robust dividend increase all things considered.


I was a bit surprised to learn that V announced a 6.7% increase in its quarterly dividend from $0.30/share to $0.32/share, which was slightly below my expectation outlined above, but I don't fault V for taking a conservative approach to their dividend increase for this year while the global economy gets back on track in the months ahead.

Across my 2 shares of V, this announcement increased my annual forward dividends by $0.16.

Missed Expected Dividend Increase #1: AbbVie (ABBV)

Given that AbbVie (ABBV) has reported earnings in November over the past couple years and has also announced its dividend increases in November, I failed to include ABBV's expected dividend increase.

ABBV has delivered fair operating results year to date, especially considering the impact of COVID-19 on both its Botox Cosmetic and Therapeutic businesses.

As a result of ABBV's operating results and the accretive impact of its acquisition of Allergan earlier this year, Yahoo Finance analysts are expecting $10.44 in EPS this year and $12.14 in EPS next year, which leaves plenty of room for a high-single digit dividend increase.

I am expecting ABBV to announce a 9.3% increase to its quarterly dividend from $1.18/share to $1.29/share when the company reports earnings this Friday.


ABBV managed to exceed my expectations as the company announced that it was hiking its quarterly dividend 10.2% from $1.18/share to $1.30/share.

Across my 6 shares of the stock, my annual forward dividends were boosted by $2.88 as a result of the above dividend announcement.

Distribution Cut: Energy Transfer (ET)

While this did catch me a bit by surprise in that ET's distribution remained relatively well covered prior to the announcement of its distribution cut, I do understand the rationale for the decision to cut the distribution.

When considering the possibility of contending with penalties for operating without a permit in the case of DAPL and additional disputes pertaining to the Mariner pipeline in Pennsylvania, as well as ET's debt load, I think that despite how painful this cut was for me, it was a necessary one for the continuity of the business going forward.

It also provided a much needed reminder for me to focus more on dividend growth and capital appreciation going forward, which is why I will be emphasizing the purchase of SWANs such as PepsiCo (PEP), Johnson & Johnson (JNJ), and General Dynamics (GD) in the weeks ahead.

This distribution announcement resulted in a $35.38 plunge in my annual forward dividends/distributions across my 58 units of ET.

Expected Dividend Increase for November: Iron Mountain (IRM)

Staying on the theme of reiterating my outlined expectations in the previous post of this series, I am doubling down on my thoughts relating to Iron Mountain's (IRM) upcoming dividend announcement.

Given that IRM is working to reduce its AFFO payout ratio to a more sustainable payout ratio that is in line with its data center REIT peers, I'm not expecting a significant increase in IRM's dividend.

Due to this stated objective of IRM, I am expecting that IRM will announce a 1.1% increase in its quarterly dividend from $0.6185/share to $0.6250/share.

This announcement would increase my annual forward dividends by $0.208 across my 8 shares of IRM.


I initially thought that IRM's earnings were going to be reported on October 29, but I noticed after I published this blog post that IRM will be reporting earnings on November 5.

Concluding Thoughts:

Aside from the distribution cut from ET in the final few days of this month, I was pleased with the dividend announcements this month as V and ABBV both delivered nice dividend increases, especially in light of how this year has been on the dividend announcement front. 

Despite the $3.04 uptick in annual forward dividends from V and ABBV, my annual forward dividends declined $32.34 as a result of the halving of ET's distribution.


Have you benefited from any first time dividend increases as I did from V's recent dividend announcement?

Has your portfolio stabilized in terms of dividend announcements as mine has over the past couple months (aside from ET's recent announcement)?

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

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