2021 continues to fly by. We are in the heat of summer and football season is upon us! The real story is how hot the stock market is and the fact that dividend stocks continue to announce strong dividend increases! We are always on the lookout for stocks that help our passive income grow! Therefore, every month, we summarize the expected dividend increases. Here is the June installment of our monthly dividend increases article.

Why Dividend Increases Matter

Dividends are the foundation of our goal to reach financial freedom. We continuously invest in dividend growth stocks to grow our passive income. If you haven’t figured it out by now, we eat, sleep, and breathe dividends!

If the goal is to produce a passive income stream that will one day cover our expenses, making sure that income stream GROWS is critical. Without growth, your dividend income stream will lose purchasing power to inflation. Inflation is typically between 2%-3% annually; although, it has been higher the last few months (4.2% in April and over 3% in May). Therefore, if you cannot achieve average dividend growth of at least that percentage, your income stream will be able to cover less, and less, over time.

That is why dividend growth is a major deciding factor in all of our stock purchase decisions. It is the 3rd metric of our Dividend Stock Screener for a reason. For each stock, we review a company’s history of increasing dividends (consecutive annual dividend increases) and a company’s five-year average dividend growth rate!

We cover dividend news extensively on our Youtube Channel. Each week, we discuss the major dividend increases from the week before. Heck, each month, we even bring this article to life and cover the major expected dividend increases of the coming month.

Actual Dividend Increases in July 2021

July was an interesting month for dividend increases. On paper, there should not have been that many dividend increases. The month is relatively quiet, in terms of dividend increases. However, in reality, the beginning and ending of the month had some fireworks. First, to start the months, bank stocks flexed their muscles.

After the Federal Reserve completed their review of bank stress tests, the Fed gave banks the go-ahead to begin increasing their dividend and increase share repurchase programs. A pause was placed on big banks during the pandemic to preserve capital. Now though, banks have the green light to begin increasing their payouts.

The largest banks did not mess around when it came to announcing huge dividend increases. J.P. Morgan (11.1%), Bank of America (17%), Morgan Stanley (100%), Goldman Sachs (60%), and jacked up their dividend. Chances are if you own a bank stock, you received a dividend increase. So if you haven’t already, make sure to log in to your brokerage account and check it out!

The water settled down until the final week of the year. Then, once again, companies started increasing dividends left and right. It was so crazy that we featured 9 dividend increases and talked about them all.  Some of the featured dividend increases from the video, that I want to highlight again, were Royal Dutch Shell (38%), Hershey (12.1%), American States Water (9%), Norfolk Southern (10.1%), and  Mondelez (11.1%). There were still others discussed in the video too!

The most shocking of the dividend increases was Shell. The company slashed its dividend last year at the start of the pandemic. Shell’s management team preserved capital and paid down debt, especially as the price of oil slumped. Since then, oil has rebounded significantly and the company has increased its dividend 3 times since its dividend increase. Their dividend is ROARING back.

Lastly, there are still a few other dividend increases that happened as expected during the month. We followed them closely since we are obsessed with dividend increases. But some of you may have missed the following dividend announcements: Smuckers (10%), Stanley Black & Decker (12.9%), Cummins (7.4%), and Scott’s Miracle Grow (9.8%).  This was definitely an action-backed month!

Expected Dividend Increases in August 2021

Hopefully August will be as exciting of a month filled with as many dividend surprises as July. We may need to see some surprises come through because overall, we are not expecting too many dividend increases in August. Let’s divide in and look at the 3 expected dividend increases in August 2021!

Dividend Stock #1: Illinois Tools Work (ITW)

We are starting this list off strong. ITW is a diversified machinery company that goes head to head with 3M Company (MMM), one of my favorite dividend growth stocks. Several years ago, Lanny and I purchased shares of ITW when the company’s stock price dropped. Thank goodness we did, because the stock price and the company’s dividend have soared accordingly.  Now, the stock price has increased so much that it is P/E Raio is over 26X. ITW is definitely not undervalued at this time based on Metric 1 of our Dividend Stock Screener. Even if I’m not buying today, I’m still getting excited about the company’s upcoming dividend increase that should be in the high single-digit range and their current 2% dividend yield.

Last year’s dividend increase –  6.5%

Five-year average DGR –  15.99%

Expected timing of Dividend Increase Announcement –  Beginning of the month

Dividend Stock #2: Dover Corporation (DOV)

The second company on this list is a Dividend King. Dover Corporation has increased its dividend for 65 consecutive years. In fact, their dividend streak is one of the longest out there (according to the list of Dividend Kings).  Like ITW, Dover is not exactly trading at a discount, as their P/E Ratio is ~24x. Further, one thing jumps out about the company’s dividend history that I am not a fan of. Dover’s dividend yield is only 1.2%. Typically, with a low yield, I would expect a high dividend growth rate. Unfortunately, Dover’s average dividend growth rate is less than 4%. Not the metrics I typically like to see, that is for sure.

Dividend Stock #3: Altria Group (MO) 

Lastly, Altria Group. The tobacco, sin stock, is hot on the minds of dividend growth investors. The company has a strong dividend yield, which you would expect from the tobacco industry. The company is looking to overcome past investment decisions (Juul) while also shedding the non-core businesses to help clean up its balance sheet. Earlier in the decade, Altria has strong dividend growth. Lately, though, the increases have been less than stellar. Hopefully, with the balance sheet clean-up, the company will return back to its form.

Last year’s dividend increase –  2.4%

Five-year average DGR –  8.89%

Expected timing of Dividend Increase Announcement –  End of the month

Summary

So there we have it. 3 strong dividend stocks that are set to announce an increase in August. Hopefully, this article has you excited and amped up to continue buying income-producing assets that help grow your dividend income stream. If anything, July should remind you that DIVIDENDS ARE BACK and the time is now to make every dollar count. Let's keep pushing towards financial freedom!

What dividend increases are you expecting in August? Did you receive any increases in July? What are you expecting from the 3 companies featured?