I’ll get straight to it. Unlike 2017, where my projections were very spot on, 2018 I was way off. In large part, I under accounted the benefit of the tax reform would play in companies returning cash to shareholders. I expected stockholders to be the major benefactors of the tax cuts, but I underestimated the cash that would flow through.
As far as my holdings, I projected 37 of 47 companies to announce increases. 1 company to announce a cut, and 9 companies would not have any change. In reality, I was extremely close with 38 holdings announcing increases, 2 companies having dividend cuts, and 7 companies only maintaining their dividend.
Where I was really off in my projections this year was in the money passing to investors. But I was off in a good way, as I underestimated the increases. I had estimated (unweighted) for a 2.55% increase for 2018. What actually happened was a 16.1% increase across the holdings. This was fueled by 30 companies announcing dividend increases that exceeded my expectations, 6 companies meeting my expected increases, and 2 (BAC and HRL) announcing increases that fell short of expectations.
Some of the notable standouts for the year were MO and ABBV, both announcing 2 increases for the calendar year, representing increases for the year of 21.2% and 50% respectively for the year. Other honorable mentions were CLX, MCD, MMM, MCD, and UL with healthy increases of 15+%. What’s notable of all these companies (except ABBV) is these are all old boring companies returning huge amounts of cash back to investors.
Really, the big disappointment on the year was GE. After rebounding and building the dividend back up to $0.24 quarterly per share, the company cut the dividend in half to $0.12 and 2019 is not shaping up any better with reports of the dividend being slashed to 1 penny.
In the next few days, I will have my 2019 dividend projections ready. I expect 2019 to be less exciting for dividend investors, as there is not much to be excited about for the markets. Interest rates are heading up and worse the tariff standoff is providing huge headwinds for the markets.