Valspar Corp is a dividend aristocrat as well as a component in S&P 500 index. It has been increasing its dividends for the past 27 consecutive years. Over the past 10 years the company has delivered an average total return of 5.40 % annually to its loyal shareholders.
At the same time the company has managed to deliver an impressive 7.00 % average annual increase in its EPS.
The ROE declined from a high of 21% in 1998 to a low of 8% in 2001, before recovering to 13% in 2007.
Annual dividend payments have increased over the past 10 years by an average of 11% annually, which is above the growth in EPS. An 11% growth in dividends translates into the dividend payment doubling every six and a half years. If we look at historical data, going as far back as 1994, VAL has indeed managed to double its dividend payments every six and a half years.
If we invested $100,000 in VAL on December 31, 1997 we would have bought 6435 shares (adjusted for a 2:1 split in September 2005). Your first quarterly check would have been $337.84 in March 1998. If you kept reinvesting the dividends though instead of spending them, your quarterly payment would have risen to $1045.80 by December 2007. For a period of 10 years, your quarterly dividend has increased by 166.67 %. If you reinvested it though, your quarterly dividend would have increased by 209.60%.
The dividend payout has remained below 50% during our study period. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
I think that VAL is attractively valued with its low price/earnings multiple of 14.60 and low DPR. The company also boasts an above average dividend yield at 2.50%.