Wednesday, August 25, 2010

1991 Dividend Achievers additions- Where are they now?

The Dividend Achievers index includes companies that have increased annual dividends for at least 10 consecutive years and have met specific liquidity screening criteria. Companies that are included in the Dividend Achievers index typically generate strong cash flows, have solid balance sheets and a proven record of consistent earnings growth. These characteristics typically make these companies attractive takeover targets.

I was recently able to find the 1991 Dividend Achiever’s list. I checked the new additions for 1991 in order to investigate what happened to the companies after they have been added to the index. There were some limitations to the research, since companies changed their names, or were acquired, which made it difficult to track them down since current stock databases might not have freely available information on them. The companies which were added to the index in 1991 include:

First Empire State Corp later changed its name to M&T Bank (MTB). M&T Bank Corporation operates as the holding company for M&T Bank and M&T Bank, National Association that provide commercial and retail banking services to individuals, corporations and other businesses, and institutions. The company stopped raising dividends in 2008 and was deleted from the index in 2009. The yield on cost today of a December 1990 investment in the stock would be 51.10%. One dollar invested in 1991 would be worth 13.30 dollars today. (analysis)

American General (AGC), which was acquired by American International Group (AIG) in 2001. The company had increased dividends up until the merger was finalized.

Rouse Co (ROUS) was acquired by General Growth Properties in 2004. The company had increased dividends up until the merger was finalized.

Bank South Corp (BKSO) was acquired by Bank of America (BAC) in 1996. The company suspended its dividends July 1991, after suffering from large losses. The dividend was reinstated in 1993.

Pall Corporation (PLL) manufactures and markets filtration, purification, and separation products and integrated systems solutions worldwide. Pall Corp (PLL) stopped raising dividends in 2002 and then cut distributions by almost 50%. The yield on cost today of an early 1991 investment in the stock would be 4%. One dollar invested in December 1990 would be worth 3.29 dollars today.

State Street Corporation (STT), through its subsidiaries, provides various products and services for the institutional investors worldwide. The company cut its dividend payment in 2009 to 1 cent/share, from 24 cents/share. The yield on cost had reached 24.70% by 2008; after the cut it went down to 1%. One dollar invested in December 1990 would be worth 12.68 dollars today. (analysis)

Crawford & Company (CRD-B) provides claims management solutions to insurance companies and self-insured entities worldwide. The company cut dividends in 2002 and eliminated the dividend payment in 2006. One dollar invested in December 1990 would be worth 64.40 cents today.

Wrigley Wm Jr (WWY) was acquired in 2008. The company had increased dividends up until the merger was finalized. Berkshire Hathaway (BRK.B) provided financing for the acquition.

Black Hills Corporation (BKH), together with its subsidiaries, operates as a diversified energy company. It operates through two groups, Utilities and Non-regulated Energy. The company is still a member of the dividend achievers index. The yield on cost today of a December 1990 investment in the stock would be 17.10%. One dollar invested in December 1990 would be worth 10.92 dollars today.

Central Fidelity Banks (CFBS) was acquired by Wachovia (WB) in 1997. The company had increased dividends up until the merger was finalized.

American Precision Industries (APR) was acquired by Danaher (DHR) in 2001. The company was deleted from the index in 1997 after it failed to increase dividends.

The Laclede Group, Inc. (LG) operates as a public utility holding company providing natural gas service to approximately 630,000 users in St. Louis. The company failed to increase its dividend in 1992, just one year after being admitted in the index. The yield on cost today of a December 1990 investment in the stock would be 10.50%. One dollar invested in December 1990 would be worth 6.48 dollars today.

KeyCorp (KEY) operates as a holding company for KeyBank National Association that provides various banking services in the United States. The company cut dividends in 2008, amidst the worst financial crisis since the Great Depression. The yield on cost had reached 27.10% by 2008; after the cut it went down to 0.70%. One dollar invested in December 1990 would be worth 3.32 dollars today.

Boatmen’s Bancshares (BOAT) was acquired in 1996 by Bank of America (BAC). The company had increased dividends up to the merger was finalized.

St. Joseph Light & Power (SAJ) was acquired by Utilicorp (UCU) in 1999. The company had increased dividends up to the merger was finalized.

CLARCOR Inc. (CLC) provides filtration products and services to customers worldwide. It operates in three segments, including Engine/Mobile Filtration, Industrial/Environmental Filtration, and Packaging. The yield on cost today of a December 1990 investment in the stock would be 10.80%. One dollar invested in December 1990 would be worth 15.70 dollars today.

OGE Energy Corp.(OGE) , together with its subsidiaries, operates as an energy and energy services provider offering physical delivery and related services for electricity and natural gas primarily in the south central United States. The company failed to increase distributions in 1992, just one year after being admitted in the dividend achievers index. The Oklahoma Gas & Electric utility didn’t start raising dividends again until 2007. The yield on cost today of a December 1990 investment in the stock would be 13.50%. One dollar invested in December 1990 would be worth 15.00 dollars today.

Source Capital, Inc. (SOR) is a close-ended equity fund launched and managed by First Pacific Advisors, LLC. The fund invests in the public equity markets of the United States. The yield on cost today of a December 1990 investment in the stock would be 6.60%. One dollar invested in December 1990 would be worth 6.50 dollars today. The company failed to increase dividends in 1991.

IE Industries was acquired in 1997 by WPL. The company had increased dividends up until the merger was finalized.

Colonial Gas was acquired in 1999. The company had increased dividends up until the merger was finalized.

The results of the 1991 additions are really stunning. Out of 20 companies that were added to the dividend achievers index only 2 are still its members - CLARCOR Inc. (CLC) and Black Hills Corporation (BKH). However, half of those additions became takeover targets. Of those ten acquired companies, only two stopped paying distributions before they were acquired. Five companies eventually cut distributions – State Street (STT), Key Corp (KEY), Source Capital, Inc. (SOR), Crawford & Company (CRD-B) and Pall Corporation (PLL). The remaining companies either maintained distributions or raised them sporadically over the next 19 years. Stay tuned for my article next week, when I will discuss how to profitably exploit the findings of this research.

Full Disclosure: Long MTB
Relevant Articles:

- Dividend growth stocks are attractive buyout targets
- Where are the original Dividend Aristocrats now?
- Buy and hold dividend investing is not dead
- Strong Brands Grow Dividends

4 comments:

  1. Great "where are they now?" post.

    Do you foresee some of the same outcomes from these stocks, in today's 2010 batch dividend achievers (i.e., history repeating itself)?

    ReplyDelete
  2. It is what I've been preaching for years, protect one's self by closely examining not only the companies but the economic conditions in which they operate. When a company starts having to defend its dividend, watch out, GE being a prime example in '09. No sure things in the stock market.

    My greatest fear would be to have a 100% B&H dividend portfolio and watch them decline to low levels, based on the collection of dividends, then to only find a bunch of them cut at the lows....hmmmm '08-'09. I think a better way, is to buy dividend stocks, but reduce them when the valuations are at a premium.......yea, I know, easier said than done.

    ReplyDelete
  3. Hi!
    I'm very late to the party but very much interested in your 1991 list of Dividend Achievers. Would it be possible to get the complete list from you? I have been trying to find the original Moody's list from 1979 but it seems impossible to locate. Please advise.

    ReplyDelete

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