Honeywell has a clear plan for the next few years. Image source: Getty Images.

 Industrial giant Honeywell (HON 0.12%) has been making some big changes to its business lately. Not quite as big as the seismic shifts over at rival General Electric (GE -1.80%), but big nonetheless.

Some of these shifts -- like increasing its dividend -- are working well. Others -- like the attempted takeover of United Technologies (RTX -0.43%) -- fizzled. So, based on what's working and what isn't, here's what to expect from Honeywell over the next four years.

A $2.50 dividend

Luckily for investors interested in where Honeywell is going, the company released a comprehensive five-year plan in 2013. However, the plan only takes us through 2018. As a result, many of the company's statements have measured its success against its plans for 2018, not 2020.

A major feature of that five-year plan was CEO David Cote's pledge to grow the dividend faster than the company grew earnings. This was a necessary move to attract investors; in 2013, Honeywell's dividend yield was the lowest among its major U.S. industrial conglomerate peers. Even with the successful implementation of the company's dividend growth strategy, the company is still a laggard in this regard:

HON Dividend Yield (TTM) Chart

HON Dividend Yield (TTM) data by YCharts.

However, the actual dividend itself has been growing -- unlike rival GE's, which is currently frozen -- from $1.53 per share in 2012 to $2.15 in 2015. At this rate of growth, the company will almost certainly see a $2.50 dividend -- if not $2.75 or even $3.00 -- by 2020.

Slow growth is still growth

Honeywell's five-year plan called for not only growing the dividend, but also growing the company's earnings and revenue, both organically and through acquisitions.

Cote hoped to double spending on acquisitions to $10 billion or more. And despite a very high-profile rebuff of Cote's acquisition offer for United Technologies, Honeywell's acquisitions plan seems to be on track.

The company recently completed the $5.1 billion acquisition of Melrose Industries' Elster division, a manufacturer of gas meters and other thermal gas technology, which it anticipates will add about $1.8 billion in annual sales. Other acquisitions have been announced, including the $1.5 billion acquisition of warehouse automation company Intelligrated.

Despite this active acquisitions strategy and growth in both EBITDA and EPS, top-line growth seems to be falling short of projections. 2015 revenue was lower than the $39.1 billion it was in 2013, when the five-year plan was announced. Even with two years to go, the company is nowhere near its 2018 goal of $59 billion in revenue, with $8 billion coming from acquisitions.

Recent statements by the company have cautiously indicated slow top-line growth. At the company's investor day, Cote suggested core organic growth of 4% to 5% might be reasonable for 2017, but the company later reduced its forecast for the second half of 2016. On the second-quarter earnings call, Cote insisted that "the conditions that generate a 4% to 5% increase are still there," but also cautioned that "we'll see what the numbers actually look like as we get on further through the year."

Hard cash from software

Like its rival GE, Honeywell has moved beyond industrial equipment and into the software that controls and analyzes that equipment's performance. Advancing Honeywell's HOS operating system is a major feature of the company's current five-year plan. The latest iteration, HOS Gold, has been rolled out as scheduled.

As an operating system, HOS Gold didn't have the analytical capabilities of GE's Predix system, so earlier this year, Honeywell introduced an analytical platform of its own called Uniformance Suite. 

Expect software revenue to make up a significant chunk of Honeywell's overall revenue by 2020. The company has made the importance of its software a major talking point when discussing its next CEO, current President and COO Darius Adamczyk. In talking about Adamczyk on the company's second-quarter earnings call, for example, Cote had this to say (emphasis mine): "Darius is the right person to lead the company into a new era where we will need to keep evolving, become even more global, to become more of a software company, and to become more nimble. He has the growth mindset, global acumen, and software expertise to be a highly successful CEO for Honeywell."

Honeywell is still catching up to GE, which has been a leader in this space. In fact, GE expects to triple its software revenue to $15 billion by 2020. That would make it one of the top 10 software companies in the world. If Honeywell can capture a market share even one-third that size (since Honeywell's annual revenue is about one-third of GE's), it would boost Honeywell's revenue by more than 10%.

Investor takeaway

By 2020, Honeywell should have continued to increase its dividend to at least $2.50 per share, continued to grow earnings and revenue through a mix of organic growth and acquisitions, and derive more of its revenue from software. Investors will want to keep an eye on these metrics to see how the company is progressing, particularly after the new CEO takes the reins at the end of March 2017.

If the company stops regularly increasing its dividend, stops growing, or if software efforts fizzle, investors may want to start shopping around for better places for their money. With the industrial landscape changing so quickly, it would be very easy for even a major company like Honeywell to be left in the dust.