Expected Dividend Increases in June for my Vrijheid Fonds.
It is that time of the month again in which I look at my Vrijheid Fonds and see which companies are expected to raise their dividend. 2020 has been a weird year so far. We are in an intelligent lock down, and I have received some dividend cuts. Despite these cuts I also have received some dividend increases fortunately. The counter is now on 18 announcements already!!
In this post I try to summarize the companies that I expect which will announce a dividend increase in the coming month.
Why you ask? I find it fun to track the dividend increases because I like companies that regularly increase their dividend. I believe that companies can only increase their dividends regularly if they grow earnings sufficiently. And it is the most outward sign by management as to how business is going. These companies show confidence in the potential growth of future earnings. And that are the kind of companies I like in my Vrijheid Fonds.
But before I take a look at the month of June, just let us first look back at the previous month. Well I can be very short about the dividend increases in the month of May. I was spot on with my expectations and predictions 😂.
I didn’t receive a single dividend increase announcement.
Here are my predictions for the dividend increases I expect in June:
In this lock down, we are in right now, there are some companies that are going through a rough time. And there are also companies that are experiencing golden times. These companies are having a large turnover than normal because people are hoarding and buying extra groceries. So it is fair to say that the consumer discretionary and consumer staples are the companies that are doing great during this lock down. And you guessed it, this dividend king is one of them. Target has a uninterrupted streak of more than 50 years of dividend increases. Man, I like these kind of companies. Isn’t it the dream of every Dividend Growth Investor (DGI)? Target had a good year (2019) so hopefully they will raise the dividend a little bit more than the last two years.
Table 1. Dividend increases of TGT
I looked on the Internet and in their latest company financial information. On the basis of my own little research I expect the increase to be almost the double of last year’s increase. They have published some good numbers in 2019, they have a low payout ratio, and they are thriving right now due to the hoarders. So, I think they have enough room for an increase and still have enough money to spare for worse times.
Current Dividend Yield: 2.22%
Prediction quarterly dividend: 4.0% – 8.0% increase to $0.69-0.71
Realty Income (O)
Realty Income is another Dividend Aristocrat that I love. They have been raising their dividends like clockwork. And now have 27 years of uninterrupted dividend increases under their belt. Realty income, the monthly dividend company, rewards its investors with a couple of increases every year. From my experiences it is fair to say that the increase announcements in June aren’t the biggest every year. So in my opinion Realty Income is not likely to reward investors with a massive bump in June of this year.
|2019 June||2018 June||2017 June||2016 June||DGR-10yrs|
Table 2. Dividend increases of O
I looked on the Internet and in their latest company financial information. On the basis of my own little research I expect the increase to be around the same as the last couple of years. I’m sure that the impact of the COVID-19 pandemic is also felt by Realty Income. Their estate portfolio is deliberately designed to generate predictable cash flow through a variety of economic environments. But their portfolio is not immune to the economic shutdown that has resulted from COVID-19.
They have tenants operating across 51 different industries. And a number of these tenants have requested rental relief. O is reviewing these requests on a case-by-case basis. How hard Realty Income is hit, can’t be said right now, we just have to wait for the numbers. In the Q1-2020 Result-Earnings call transcript I have seen some good numbers. They have completed a very strong quarter and are well positioned from both a balance sheet and portfolio standpoint heading into this period of uncertainty.
Therefore, I expect the dividend increase to be the same as last year’s.
Current Dividend Yield: 5.40%
Prediction quarterly dividend: 0.1% – 0.3% increase to $0.2332-0.2337
I’m excited how my predictions will turn out. Next month I will write a review and look back at my predictions. I can’t wait for the month June and the dividend increases that will be announced. I’m always excited about new dividend increases. I hope that I’m as right as my predictions for this month 😆
Which dividend increase are you expecting?
I like to hear from you.
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