Income investors have come to look forward to TJX Companies' (NYSE:TJX) late February earnings report. That fourth-quarter announcement includes the all-important holiday selling season, which is critical to the business' annual growth. But it's also the time when management announces its new dividend.

The last few hikes have been significant, including a 25% boost in early 2018 and an 18% increase this time last year. Assuming the off-price retailer's holiday quarter went roughly as planned, investors can expect to see another significant raise for fiscal 2020 when TJX Companies reports its results on Wednesday, Feb. 26.

Three young women shopping.

Image source: Getty Images.

Growth expectations

Most investors who follow the stock are expecting sales to land at $11.8 billion, 6% higher than last year. That increase is about evenly balanced between an expanding base of stores and rising sales at existing locations across the T.J. Maxx, Marshalls, and HomeGoods banners.

Investors will be watching to see whether TJX Companies suffered from the same surprise slowdown that caught both Target (NYSE:TGT) and Walmart (NYSE:WMT) through the holiday season. That slump would show up in comparable store sales gains that fall below 3% or show flat or declining customer traffic.

In November, management noted healthy growth metrics heading into the peak selling period. But since other national retailers have since revealed a slowdown in consumer spending growth right around Christmas, it may not be a big surprise to see TJX Companies report its own sluggish sales gains. 

Earnings and dividends

TJX Companies' last few earnings reports implied plenty of room for upside surprises when it comes to earnings. Each of the retailer's four sales divisions outperformed margin goals last quarter, after all, despite cost challenges like tariffs and supply chain investments. These wins convinced management to lift their 2019 earnings outlook in mid-November to target a 7% increase for the year, up to roughly $2.62 per share.

The company's annual dividend increase should track with that profit boost, which means income investors can expect a more modest hike than the 18% raise they saw in early 2019 after profits rose 9%. TJX Companies' ample cash flow still gives management plenty of room to issue a significant increase, which would also mark the company's 25th consecutive year of annual raises.

Looking ahead

CEO Ernie Herrman and his team will issue a 2020 outlook on Wednesday that's likely to sound familiar to long-term shareholders. The retailer should target comparable-store sales gains in the neighborhood of 2% to 3%, plus the addition of new stores at a roughly 4% annual pace.

Those numbers aren't much higher than the increase Walmart is expecting in 2020. But TJX Companies can still claim a much longer unbroken streak of growth. If it expands sales again this year, the company will have achieved 25 consecutive years of annual comps increases. It is also in a better earnings position than the king of retail, given that its adjusted operating margin has been trending higher while Walmart's has ticked lower in each of the last two years.