Since I’m pretty much done for this years dividend increases, it’s as good a time as any to start planning for 2017. Below is a spreadsheet for 2017 with projections for dividend increases for 2017. Check the bottom for a few notes. The holdings are not weighted in any way, as I didn’t feel like taking the time to do that.
For 2016, 35 holdings (72.92%) of holdings announced at least one dividend increase for the year (RAI actually had 2 increases); 2 holdings (4.17%) had dividend cuts (DD and AINV), and 11 holdings (22.92%) just maintained their dividend. A few holdings I was disappointed to not have an increase: GE, ORCL, and DE. I was also disappointed in the shitty increase from PG, and the second year of a disappointing increase from PM.
Not factoring in any dividend reinvestments for 2017, I’m expecting organic dividend growth of around 5.51% from my dividend holdings. This means, my passive dividend income should grow by itself without lifting a finger well above the current level of inflation (appox 2%). I would expect with some of those dividends being reinvested, I should be pushing a little over 7% increase in dividend income. Think about that for a second, it’s like getting a 7% pay raise at work for the year, except I am not having to show up to work. That would also place my dividend income doubling within a decade at that rate, which I have stated as my goal on this site many times. My money works harder for me these days, than I work for it.
Overall, I’m expecting 36 holdings to increase their dividend for the year. This would represent 75% (about par for the course) of my dividend holdings announcing increases. I’m not really expecting any cuts to occur, but honestly wouldn’t be surprised if a few possibly made cuts (BP- being the main suspect). My oil companies should be interesting. Even with the recent agreement from OPEC to try and lower oil output to boost oil prices, classic supply and demand will play out. The middle east doesn’t have quite the leverage it had years ago over oil prices with the glut of supply caused by fracking and lots of offshore discoveries along the US coastlines. So, while there is a short term bounce in the price of oil, I expect as oil prices rise, an immediate increase in fracking and offshore drilling will negate what OPEC is trying to do, and bring prices back done a little. Supply and demand is a bitch. So my most likely suspect of a dividend cut would have to go to BP. For CVX, I’m not expecting an increase for the year if oil prices average in the mid 40’s. For XOM, I know their cash flows are strong enough to do an increase (or at least just a 1 cent token increase), but am watching to see if they will snap that 34 year dividend increase streak. They can always decrease their stock buyback program as well. For a refiner, like MPC, these low oil prices are a boon, so I’m still expecting a pretty strong dividend increase. Of course, a war breaking out in the middle east or some crazy shit just happening in that area could always provide a sudden shock to the system.
Aside from oil prices, I’m expecting the strength of the dollar to be another recurring theme having an impact on earnings. A lot of my holdings are boring consumer staples. While most of their payouts are reasonably safe, weakness in the dollar would help a few companies earnings such as K or CL. We’ll see how this game of chicken plays out between the Fed and Wall Street. I’ve stated that it would be a mistake for the Fed to increase rates right now. If there is an increase in December, look for all hell to break loose on Wall Street, much like what happened at the start of 2016. Any increase in domestic rates, while foreign central banks keep low rates, would serve to only strengthen the dollar, further hurting multinationals earnings.
So without further adieu, here are my projections for 2017 dividend increases to my holdings. I will update the spreadsheet as the announcements roll in (also waiting on the Q4 for UL to come in):
Sound off below with some of your own projected increases from your own stock holdings.
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My results and forecast as eerily similar. Good work!
Thanks for stopping by. Yep, most of the companies should be pretty predictable. Those oil companies are the tricky one in 2017.
I think the crisis in Venezuela will have bigger spillover than most folks are giving it credit for, but overall I think you are right to focus on OPEC and what will happen in the oil market.
I feel bad for the Venezuelan people. Ridiculous inflation and shortages of essential items. I believe the government was actually trading oil for toilet paper with Jamaica at one point, because shortages got so bad. Clorox was one of the first companies to completely abandon their plants and operations a couple years ago, because the inflation made it impossible to make a profit. Other companies have since followed.
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