Investors who saw dividend increases grow at the tune of 10% or more in the past five years are likely to see them slow sharply this year and continue over the next few years as corporate profit growth weakens. Still, dividend growth will remain moderate at around 5%. The healthcare and financial sectors are expected to raise dividends the most while telecom and consumer discretionary keep dividends almost flat. We'll look at sectors, companies and details. (For more, see: Dividend Growth Rate and the Effect of Changing Dividend Policy.)

Dividend Growth in 2017

Companies issue dividends to shareholders in order to return some excess profits to corporate owners. This year, Standard & Poors (S&P) 500 companies are expected to increase their dividends 6%, however Barron's predicts that in 2017, these relatively high rates of dividend growth are likely to decline. For example, analysts at Goldman predict a 5% rate of dividend growth next year among S&P 500 firms. This will be caused by mounting pressures on profitability. Still, economic policies under president Trump may help boost profits through lower corporate taxes and tariffs on foreign competitors. (For more, see also: How And Why Do Companies Pay Dividends?)

Dividend rates are likely to vary by industry and sector. Barron's report suggests that in 2017, "financials and health-care companies will lead, with 9% growth each, Goldman predicts. Energy, which has been battered by low oil and gas prices, is expected to stabilize in 2017 with flattish payouts. Other dividend projections include technology and materials, both up 7% in 2017 versus this year; consumer staples and utilities, up 5%; industrials, ahead 6%; and telecom and consumer discretionary, up 1%." (For more, see also: The Power Of Dividend Growth.)

The Bottom Line

Corporate dividends for 2017 may grow at a moderate 5% in 2017, down from 6% or more over the past five years. Pressure on profits is to blame, but new economic policies under Trump may improve some of those predictions. Financials and healthcare will see the strongest dividend growth while telecom and consumer discretionary will be the most sluggish.