Expected Dividend Increases for May 2022

As I'm writing this blog post, the temperature is going to soar from a high of 41 degrees Fahrenheit today to 55 degrees Fahrenheit by Friday. One month after the calendar officially turned to spring, it appears that the weather is finally reflecting the change of seasons here in Central Wisconsin.

With that aside, I'll be turning my attention to the dividend increases that I have received in April and looking ahead to the payout raises that I am expecting in May.

Actual Dividend Increases for April 2022

Dividend Increase #1: Johnson & Johnson (JNJ)

Johnson & Johnson declared a 6.6% increase in its quarterly dividend per share from $1.06 to $1.13. This came in just below my expectation of a 7.5% hike in the quarterly dividend. But it marked the 60th straight year that the stock raised its dividend. JNJ is undoubtedly one of the best businesses in the world and I'm thrilled to be a shareholder.

Across my five shares of JNJ, my net annual forward dividends surged $1.40 higher due to the stock's dividend boost.

Dividend Increase #2: Southern Company (SO)

Southern Company announced a 3% raise in its quarterly dividend per share from $0.66 to $0.68. True to form as a consistent utility, this was in line with my prediction. SO is a quality utility with 21 consecutive years of payout increases under its belt. That's why I'm glad to hold the stock in my portfolio.

My net annual forward dividends edged $0.40 higher across my five shares of SO as a result of the dividend increase.

Dividend Increase #3: Tanger Factory Outlet Centers (SKT)

Tanger Factory Outlet Centers declared a 9.6% increase in its quarterly dividend per share from $0.1825 to $0.20. This is still well below the $0.3575 peak in the early days of the COVID-19 pandemic. But it's nice to see that SKT is working toward restoring its dividend. And its fundamentals have improved to the point where I believe the dividend will be fully restored by the end of 2023. SKT will then emerge a much stronger company with loads of liquidity and a low payout ratio.

Across my 11 shares of SKT, my net annual forward dividends increased by $0.77 due to the payout raise.

Dividend Increase #4: Raytheon Technologies (RTX)

Raytheon Technologies announced a 7.8% raise in its quarterly dividend per share from $0.51 to $0.55. This came in a bit below my prediction of a 9.8% raise in the quarterly dividend per share to $0.56. But a high-single-digit dividend raise is still pretty decent.

My net annual forward dividends advanced higher by $1.12 across my seven shares of RTX as a result of the dividend increase.

Dividend Increase #5: International Business Machines (IBM)

Just as expected, International Business Machines announced a token 0.6% bump in the quarterly dividend per share from $1.64 to $1.65. It looks like Big Blue is starting to turn its business around and I wouldn't be surprised to see a resumption of larger dividend increases in a couple of years.

Across my four shares of IBM, my net annual forward dividends edged $0.16 higher due to the payout increase.

Dividend Increase #6: American Water Works (AWK)

American Water Works declared an 8.7% increase in its quarterly dividend per share from $0.6025 to $0.655. This came in a bit below my expectation of a 10% raise to $0.6625. But I'll gladly take that inflation-beating raise from AWK.

My net annual forward dividends were boosted by $0.84 across my four shares of AWK as a result of the dividend hike.

Dividend Increase #7: Energy Transfer (ET)

Energy Transfer announced a massive 14.3% hike in its quarterly distribution per unit from $0.175 to $0.20. ET has recently hinted at its ambition to restore its quarterly distribution to the previous $0.305 amount in the quarters ahead. And since ET has significantly reduced its leverage and has a very high distribution coverage ratio, the company can certainly afford to make good on this promise.

Across my 58 units of ET, my net annual forward distributions soared $5.80 higher due to the distribution raise.

Dividend Freeze: Exxon Mobil (XOM)

Exxon Mobil declared a quarterly dividend per share of $0.88, which was in line with its previous dividend. With WTI crude so high and XOM pumping out huge profits, I was surprised that they didn't increase the dividend in April. That's because they had consistently done so until the COVID-19 pandemic had them announce a dividend increase last October to keep their Dividend Aristocrat status alive.

Perhaps October will be the new April for dividend increases for XOM.

Expected Dividend Increases for May 2022

Expected Dividend Increase #1: American Tower (AMT)

The first dividend increase that I'm anticipating in May will come from American Tower. My prediction is that AMT will announce a 2.9% increase in its quarterly dividend per share from $1.40 to $1.44. What makes AMT an especially great REIT is that it raises its dividend four times a year. Low-to-mid single-digit dividend increases every quarter really add up.

Across my three shares of AMT, my net annual forward dividends would inch $0.48 higher, if my estimate is proven correct.

Expected Dividend Increase #2: Lowe's (LOW)

The next dividend increase that I expect next month is from Lowe's. LOW boasts a low (pun intended) dividend payout ratio and analysts are expecting adjusted diluted EPS to rise 11.6% to $13.44 in 2022. This is why I believe LOW will declare a 13.8% increase in its quarterly dividend per share from $0.80 to $0.91.

If my forecast is correct, my net annual forward dividends would soar $2.20 higher across my five shares of LOW.

Expected Dividend Increase #3: Leggett & Platt (LEG)

The third dividend increase that I foresee for May will come from Leggett & Platt. With 50 straight years of dividend increases under its belt, LEG is an unofficial Dividend King. And I believe the stock will extend its dividend growth streak with a 4.8% raise in the quarterly dividend per share from $0.42 to $0.44.

Across my 12 shares of LEG, my net annual forward dividends would increase by $0.96, if my prediction pans out.

Expected Dividend Increase #4: Clorox (CLX)

The next dividend increase that I'm expecting for next month is from Clorox. Since the business is currently experiencing some challenges, I'm expecting a token dividend increase to keep its decades-long dividend growth streak alive. This is why I believe CLX will announce a 0.9% increase in its quarterly dividend per share from $1.16 to $1.17. 

My net annual forward dividends would edge $0.08 higher across my two shares of CLX, if my estimate is right.

Expected Dividend Increase #5: Medtronic (MDT)

The fifth payout raise that I'm anticipating in May will come from Medtronic. I believe that MDT will declare a 7.9% increase in its quarterly dividend per share from $0.63 to $0.68.

Across my five shares of MDT, my net annual forward dividends would increase by $1.00, if my forecast is proven correct.

Expected Wild Card Dividend Increase: Omnicom (OMC)

The final dividend increase that I'm expecting next month is from Omnicom. Since OMC kept its dividend the same in February, I believe the stock will have a 7.1% raise in store for shareholders in May. This would bring the quarterly dividend per share up to $0.75 from the current amount of $0.70.

My net annual forward dividends would surge $1.40 higher across my seven shares of OMC, if my prediction pans out.

Concluding Thoughts:

The seven raises that I received in April led my net annual forward dividends higher by $10.49. This is equivalent to investing $299.71 in capital at a 3.5% weighted average dividend yield.

Looking ahead to next month, my net annual forward dividends would increase by $6.12 if all of my estimates come to fruition. This would have the same effect as investing $174.86 at a weighted average yield of 3.5%.

Discussion:

How was your April 2022 in terms of payout increases?

Are you expecting any first-time dividend increases in May 2022 like I am with CLX and MDT?

Thanks for your readership. Feel free to leave a comment below!

May 2022 Dividend Stock Watch List

As I'm writing this blog post, it's mid-April. My 25th birthday was also just a few days ago, so I'm now closer to 30 than I am to 20. Every year seems to be flying by faster than the previous!

With that aside, it will be May before we know it. This is why I will be sharing three dividend stocks at the top of my watch list for May 2022.

Image Source: Pexels

Dividend Stock #1: FedEx (FDX)

The first stock that I am considering adding to my portfolio in May is FedEx (FDX). The transportation company is among the largest in the world alongside its peer United Parcel Service (UPS), which is currently in my portfolio.

FDX looks like a fundamentally strong stock. This is because FDX's long-term growth prospects are closely linked to e-commerce.

With global e-commerce sales expected to grow from $4.9 trillion in 2021 to $7.4 trillion by 2025, there will undoubtedly be many more packages for FDX to ship. This should translate into growing revenue and earnings. And it explains why analysts expect the stock's earnings to grow at 19% annually through the next five years.

FDX also offers investors a market-beating 1.5% dividend yield. Assuming $21 in midpoint adjusted diluted EPS for the current fiscal year and a dividend per share obligation of $3, FDX's adjusted diluted EPS payout ratio will be just 14.3%.

And at the current price of $204 a share (as of April 18, 2022) the stock is criminally undervalued with a trailing-twelve-month (TTM) P/E ratio of just 10.7. For context, this is approximately half of its 10-year median of 20.8.

Dividend Stock #2: Cummins (CMI)

The next stock that I'm considering adding to my position in next month is Cummins (CMI). 

The U.S. economy runs on trucks and that's no overstatement. Trucks are responsible for moving 72% of all goods consumed in the U.S. And CMI is the company behind the engines and other components that make those trucks reliably operate to keep the economy flowing. 

An investment in CMI is a bet that the company will be able to pivot from diesel-operated engines and components to alternative energy engines and components like electric. Like myself, analysts appear to be confident that the company will do so. That's because it's anticipated that CMI's diluted EPS will compound at an 11% annual rate over the next five years.

With a diluted EPS payout ratio of 38.3% in 2021 ($5.60 in dividends per share paid divided by $14.61 in diluted EPS), CMI's dividend has the flexibility to continue growing. And better yet, the stock offers a market-topping 2.9% dividend yield.

Best of all, CMI can be purchased at a TTM P/E ratio of 13.5. This is slightly lower than the 10-year median of 15.4, which makes the stock a solid value.

Dividend Stock #3: Leggett & Platt (LEG)

The third stock that I'm thinking about adding to in May is Leggett & Platt (LEG). In a nutshell, my reasons for wanting more LEG in my portfolio are its record revenue and earnings in 2021, the well-covered and market-crushing yield, and deep undervaluation.

For a detailed and recent analysis on why I'm bullish toward LEG, I'd refer interested readers to my Motley Fool article published on the stock earlier this month.

Concluding Thoughts:

Looking ahead to May, I expect to have nearly $3,000 of capital available for investment. Unless more of the remaining stocks on my master list that I don't already own become attractive, I will be primarily building up my existing positions rather than starting new ones.

Discussion:

Are any of FDX, CMI, or LEG on your watch list for May 2022?

If not, what stocks are you considering for the month?

Thanks for reading. I look forward to your comments below!

March 2022 Dividend Income

As I'm writing this blog post, the calendar recently flipped over into April. And true to form, April showers have appeared. This will eventually give way to May flowers as the saying goes. Temperatures have warmed up and are expected to reach into the low-50 degrees Fahrenheit here in Central Wisconsin. 

Now that the month of March 2022 is in the books, it's time to take a look at what the dividend income portfolio produced during the month. 

During the month of March 2022, I received $302.53 in net dividends. Against the $353.38 in net dividends that I collected in December 2021, this is a 14.4% quarterly decline. But factoring out the $106.49 in special dividends that I received from my Capital Income Builder (CAIBX) mutual fund within my retirement account, my net dividends surged 22.5% higher from $246.89.

On a year-over-year basis, my net dividends collected in March 2022 soared 82.9% over March 2021's $165.45 in net dividends.

Digging deeper, I received $213.12 in net dividends from 44 stocks in my Robinhood portfolio. I also collected $74.95 in net dividends from my CAIBX mutual fund within my retirement account. Next, I received $13.95 in net dividends from six stocks in my Webull portfolio. Lastly, I collected $0.51 from 24 stocks within my M1 Finance account.

The $50.85 quarterly decrease in my net dividend income received from December 2021 to March 2022 can be explained by the following activity in my portfolio:

My net dividends collected from Digital Realty Trust (DLR) were lifted by $3.66 within my Robinhood account, which was the result of the recent dividend increase and the timing of the dividend payment

I also received a first-time dividend from Union Pacific (UNP) of $3.54 in my Robinhood portfolio, which was due to my decision to open a whole share position in the stock back in January.

As a result of the timing of PepsiCo's (PEP) dividend payment, I collected an extra $3.23 in net dividends within my Robinhood account.

Thanks to T. Rowe Price's (TROW) recent dividend hike and my decision to purchase two more shares of the stock in February, my net dividends received were boosted by $2.88 in my Robinhood portfolio.

Main Street Capital's (MAIN) slight decrease in its special dividend was only partially offset by an increase in its regular monthly dividend. This explains the $0.40 drop in my net dividends collected from the stock within my Robinhood account.

My net dividends received from L3Harris Technologies (LHX) increased by $0.40 in my Robinhood portfolio, which was due to the dividend increase in February.

I also collected an extra $0.50 in net dividends from Home Depot (HD) within my Robinhood account, which was the result of the recent payout hike.

My net dividends received from BlackRock (BLK) surged $0.75 higher in my Robinhood portfolio, which was due to the stock's boost to its dividend in January.

I also collected an additional $0.23 in net dividends from Dominion Energy (D) within my Robinhood account, which was the result of the dividend increase declared last December.

My net dividends received from Viatris (VTRS) jumped $0.97 higher in my Robinhood portfolio, which was due to my purchase of another five shares in January and the dividend hike announced in January as well.

I also collected an extra $4.93 in net dividends from Duke Energy (DUK) within my Robinhood account, which was the result of my decision to open a whole share position in the stock in February.

My net diviends received from Hershey (HSY) were boosted by $2.70 in my Robinhood portfolio, which was due to my choice to start a whole share position in the stock last December.

I also collected an additional $5.96 in net dividends from 3M (MMM) within my Robinhood account, which was the result of my decision to purchase four shares of MMM in January.

My net dividends received from Prudential Financial (PRU) increased by $0.50 between my Robinhood and Webull portfolios, which was due to the stock's recent dividend increase.

I also benefited from a $3.52 boost in my net dividends collected from United Parcel Service (UPS) in my Robinhood account, which was the result of my decision to add another share of UPS in February and the recent massive dividend hike.

My net dividends received from Amgen (AMGN) increased by $0.72 within my Robinhood portfolio, which was due to the dividend increase announced last December.

I collected an extra $0.17 in net dividends from Pfizer (PFE) in my Robinhood account, which was the result of the payout raise declared last December.

My net dividends received from Cummins (CMI) within my Robinhood portfolio were $1.45 higher, which was due to my purchase of an additional share of the stock last November.

I collected an additional $0.77 in net dividends from Aflac (AFL) in my Robinhood account, which was the result of the dividend hike announced last November.

My net dividends received from WEC Energy Group (WEC) surged by $1.75 within my Robinhood portfolio, which was due to share purchases last November and December.

I collected an extra $2.41 in net dividends from American Water Works (AWK) in my Robinhood account, which was the result of my decision to open a position in the stock in January.

My net dividends received from Wells Fargo (WFC) between my Robinhood and Webull portfolios edged $0.40 higher, which was due to the recent dividend increase.

I collected an extra $0.06 in net dividends within my M1 Finance account. This was the result of an additional $0.01 from UPS, the timing of PEP's $0.02 dividend payment, and the timing of Fastenal's (FAST) $0.03 dividend payment.

Finally, my net dividends received from CAIBX were $91.95 less than in December 2021 (including the $10 annual fee deducted from my account in December). That's because the 5% increase in the regularly quarterly dividend was more than offset by the absence of the special dividend that is only paid each December.

Concluding Thoughts:

Excluding the special dividends paid from my CAIBX mutual fund that skewed my December 2021 results much higher, my March 2022 net dividend income was solid. I believe that next March I'll come close to the $500 mark in net dividend income, so I'm excited to continue investing as much as possible to keep my dividend income marching higher.

Discussion:

How was your March 2022 for your capital allocation?

Did you have any new whole share dividend payers like I did with AWK, DUK, MMM, and UNP?

Thanks for your readership. I look forward to your comments below!

March 2022 Dividend Stock Purchases

Here in Central Wisconsin, the temperatures will reach into the upper-40 degrees Fahrenheit over the next few days. This is slightly above the average temperature for late-March.

Given that March 2022 is just days away from ending, I will be shifting my attention to the dividend growth stock purchases that I executed during the month.

Beginning with my retirement account, the $74.95 in net dividends that I collected from my Capital Income Builder (CAIBX) were reinvested. As I noted in my December 2021 Dividend Stock Purchases post, the only growth in my employer-sponsored retirement account going forward will come from dividends since I left my previous job last July.

My CAIBX share balance grew by 1.142 shares from 178.459 shares heading into March to 179.601 shares exiting the month. Assuming $2.13 in net annual forward dividends per share, my net annual forward dividends increased by $2.43. This works out to a 3.24% net dividend yield.

Moving to my taxable account, I started the month by purchasing four shares of VICI Properties (VICI) at an average cost of $27.68 a share. My reasoning for this purchase was outlined in a recent Motley Fool article for interested readers. The $5.76 in net annual forward dividends from this purchase equates to a weighted average net yield of 5.20%.

The next dividend stock that I opened a whole share position in was Starbucks. I bought eight shares of Starbucks (SBUX) at an average cost of $88.38 a share. I purchased SBUX because it's a classic dividend growth stock that has plunged 25% year-to-date. This was partially due to the correction of Nasdaq Composite stocks during that time, as well as concerns over employee unionization efforts at SBUX. Regardless, I believe that the investment thesis remains intact. Given the $15.68 in net annual forward dividends that I added from these purchases, this is equivalent to a 2.22% net dividend yield. 

Another dividend stock purchase that I executed during the month was three shares of Air Products & Chemicals (APD) at an average cost of $227.69 a share. As I explained in a recent Motley Fool article, APD is one of the largest industrial gases stocks in the world. This is an industry that is set to experience meaningful growth in the years ahead, which should support growing dividends for decades to come. My purchase boosted my net annual forward dividends by $19.44, which works out to a weighted average net yield of 2.85%.

I also opened a whole share position in NextEra Energy (NEE), which like SBUX, I only owned fractional shares of within my M1 Finance account before this purchase. I purchased seven shares of NEE at an average cost of $80.93 a share. For those interested in my reasoning, I also discussed NEE in the article that I linked to in my paragraph above regarding APD. My transactions added $11.90 in net annual forward dividends to my portfolio, which equates to a 2.10% net dividend yield.

Another dividend growth stock that I opened a position in during March was U.S. Bancorp (USB). I purchased 13 shares of USB at an average cost of $55.43 a share. Readers that want to know more about my buying rationale for USB can check out my March 2022 Dividend Stock Watch List post, which is where I highlighted the stock. My purchases boosted my net annual forward dividends by $23.92, which is equivalent to a weighted average net yield of 3.32%.

Finally, I added a share of Kinder Morgan (KMI) at a cost of $17.45. This purchase added $1.11 to my net annual forward dividends, which works out to a 6.36% net dividend yield.

Concluding Thoughts:

I deployed $2,880.33 in capital during March 2022 (including the net dividends that I received), which led to my portfolio adding $80.24 in net annual forward dividends during the month. This equates to a 2.79% weighted average net yield.  

My net annual forward dividends surged $8.134 higher due to dividend announcements during the month as well. Along with my dividend stock purchases, this propelled my net annual forward dividends from just less than $2,490 heading into March to a bit less than $2,580 at the end of the month.

Discussion:

How was your March 2022 for capital allocation and dividend stock buys?

Did you open any new whole share positions like I did with SBUX, APD, NEE, and USB?

Thanks for your readership. I look forward to your comments in the section below!