The Dynamic Dividend

These Companies Will Raise Their Dividends in February

Each month I compile a list of companies likely to give their shareholders a raise, based on their historical dividend activity, current financial condition, and near-term prospects. Since I started writing these forecasts, 97% (57 out of 59) of the featured companies have come through with dividend hikes during the predicted month.

Below are my picks for February, a month in which some of the biggest dividend growth names traditionally raise their payouts. Each of the seven companies listed below have increased their dividend output for at least 30 consecutive years, and collectively, they have more than 330 consecutive years of dividend growth under their belts.

Diebold (DBD) has raised its dividend every year since 1954, the longest active streak among publicly-traded companies. Look for the provider of self-service and security systems to extend its impressive run for a 59th consecutive year during the first half of February, when it typically announced its annual dividend hike.

Genuine Parts Co. (GPC) has improved its dividend output every year since 1957, and if last year’s 9.8% increase was any indication, the automotive replacement part distributor’s payout isn’t about to stall any time soon. It was the biggest dividend hike from the company in 17 years.

The Coca-Cola Company (KO) looks poised to join a very elite club by raising its dividend for the 50th consecutive year in 2012. The beverage giant, which has improved its dividend output every year since 1963, typically announces its annual increase in mid-to-late February. It’s worth noting that last year’s 6.8% dividend hike was actually Coke’s smallest in a decade, but with a cash hoard ($16.50 per share) capable of powering its current payout for the next 35 quarters, this long dividend growth story is far from over.

3M Company (MMM) raised its payout for the 53rd consecutive year last February. The 4.8% dividend hike was the conglomerate’s largest in five years, and with good reason: 3M is expected to earn three times its current dividend rate in 2012, and has more than two years of dividend coverage sitting on its balance sheet in the form of cash. Look for the company to extend the eighth-longest active dividend growth streak in early-to-mid February, when it typically announces its annual payout hike.

Sherwin-Williams Co. (SHW) reinstated its dividend in 1980 and has raised it every year since. After double-digit dividend growth every year from 2005 to 2008, Sherwin-Williams has managed to boost its quarterly payout by just a half-penny at the start of each of the last three years. That reeling in of its dividend hikes and a relatively small cash hoard would be cause for concern if the company’s payout was a bigger burden, but Sherwin-Williams is expected to earn nearly five times its current dividend rate in 2012. Expect a payout hike for the 32nd consecutive year sometime in mid-February.

Colgate-Palmolive Company (CL) ) has two big streaks on the line this year. The consumer products company has raised its dividend each of the last 48 years and, perhaps even more impressively, achieved double-digit dividend growth each of the last seven years — a tough feat for a company with such a long history of increasing its payout. I expect Colgate-Palmolive to extend at least one (and perhaps both) of its streaks during the last week of February, when it typically announces its annual dividend hike.

The Chubb Corporation (CB) has increased its dividend every year since 1966, most recently giving its shareholders a 5.4% raise last February. With a modest 26% payout ratio and huge cash pile, the question isn’t whether the insurance company will up its payout this year, but whether it will finally get aggressive and unleash a big dividend hike. Chubb’s dividend growth has been steadily eroding: The company has bumped its quarterly rate by exactly two cents per share each of the last seven years.