Sixty-seven members of the S&P 500 will increase their regular dividends at their next announcements, according to S&P Global Market Intelligence forecasts.
Future dividend payments are projected by Market Intelligence analysts, considering prior dividend histories, current news events, corporate guidance, estimated free cash flow, revenue estimates, debt ratios, capital expenditures and other factors. Each dividend forecast is complimented with confidence levels, gauging analysts' relative certainty.
S&P 500 companies took advantage of near-zero interest rates during the COVID-19 pandemic to keep financing costs manageable, said Ryan Boyd, Market Intelligence head of business development for the Americas. Dividends for the group should remain resilient despite a slowing economy and higher borrowing costs.
"Additionally, the slow but sure march to labor cost reduction, as seen in the technology and financial sector thus far, will be an added buffer if [companies] deem it necessary in mitigating the risk to shareholder returns, especially the dividends," Boyd said in an email.
Sector forecasts
Twelve of the 37 S&P 500 companies in the consumer staples sector will announce dividend increases, according to Market Intelligence data. At roughly 32.4% of S&P 500 companies within the sector, consumer staples will post a higher share of companies with expected dividend hikes than any other sector in the index.
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The Kroger Co. is expected to increase its dividend by approximately 15% to 30 cents per share in late June. The grocery giant has consistently increased its quarterly dividend in its second-quarter earnings announcement since 2015, and this trend will likely continue as the grocer has substantial cash to cover its dividend projection, according to Market Intelligence.
Approximately 20.7% of materials sector S&P 500 constituents are predicted to announce dividend increases, good for second place, followed by the financials sector.
Largest changes
Healthcare company UnitedHealth Group Inc. is forecast to announce a roughly $2.00 per share dividend in June. The managed care company's dividend has risen over the last several years, with a five-year average growth rate of 19%.
Goldman Sachs Group Inc. is expected to raise its dividend by 20% to $3.00 per share for its third-quarter announcement in July. Banking giant Citigroup Inc. is forecast to announce a dividend of 61 cents per share, an increase of about 19.6%.
Dividend forecasts for two depository institutions, Zions Bancorp. NA and Comerica Inc., were recently set to $0 amid liquidity concerns within the banking sector. First Republic Bank recently suspended its dividend in mid-March.
Dividends are typically one of the last things on the chopping block, with some companies even opting to take out debt to maintain their current dividend payouts, according to Boyd. For companies with weaker earnings, it is more likely that dividends will remain flat.
Dividend forecasts also show lower payments coming for five companies in the energy sector. Each of these companies pays both a fixed and a variable dividend every quarter based on the company's free cash flow. While the fixed component is expected to remain consistent, the variable portion is projected to be weaker than the previous payouts.
Largest S&P 500 constituents
Apple Inc., the largest S&P 500 constituent by market capitalization, is forecast to increase its quarterly dividend by 4.3% to 24 cents per share in early May. While consensus estimates show an expected decline in Apple's EPS for 2023, Market Intelligence dividend forecasts cite the company's strong free cash flow and cash on hand that will allow the company to marginally increase its dividend.
