The world is changing at a rapid pace. Some technologies such as the internet and smartphone apps have redefined the way we work and live. Despite all the change, I keep focusing my efforts on companies which have managed to keep their status quo for years, and have a high chance of continuing their quest for higher profits in the future.
The companies I tend to focus on tend to be stodgy corporations that have strong competitive advantages that allow them to keep customers happy and protect their business from competitors. They are characterized by wide moats, or strong competitive advantages such as geographic monopolies, strong brand names, strong customer relationships, economies of scale or the ability to consistently reinvent themselves.
These companies have managed to boost distributions through two world wars, the cold war, several oil price shocks and countless recessions. Their strong business models have helped them to consistently find new ways to increase sales, pass on cost increases to consumers and gain market share, that has resulted in higher profits and dividends over the past century.
Investors should study each of these companies, in order to identify the characteristics that have enabled them to pay dividends every year for over one century. This list is by no means a complete one of course, but it includes those rare companies that have listed their complete dividend histories, spanning back over one century:
International Business Machines Corporation (IBM) provides information technology (IT) products and services worldwide. The company operates in five segments: Global Technology Services, Global Business Services, Software, Systems and Technology, and Global Financing. The company has raised dividends for 18 years in a row, and has consistently paid them since 1913. The company sells for 12.40 times earnings and yields 2%. Check my analysis of IBM.
Exxon Mobil Corporation (XOM) engages in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products. The company has raised dividends for 31 years in a row, and has consistently paid them since 1911. The company sells for 12.70 times earnings and yields 2.70%. Check my analysis of Exxon-Mobil.
The Bank of Nova Scotia (BNS), together with its subsidiaries, offers various personal, commercial, corporate, and investment banking services in Canada and internationally. It operates through four segments: Canadian Banking, International Banking, Global Wealth Management, and Scotia Capital. The company has paid dividends since 1892, maintained its distributions dyring the crisis of 2007 -2009 and has bee boosting them again over the past few years. The company sells for 10.80 times earnings and yields 4%.
Edison International (EIX), through its subsidiaries, engages in the generation and distribution of electric power. It operates in two segments, Electric Utility and Competitive Power Generation. The company has raised dividends for 11 years in a row, and has consistently paid them since 1910. The company sells for 18.60 times earnings and yields 2.70%.
An honorable mention goes to Kellogg (K), which has paid dividends for almost 90 years in a row, and has a listing of all the payments since 1925. Kellogg has also raised dividends for 9 years in a row. The company sells for 12.50 times earnings and yields 3%.Check my analysis of Kellogg.
Full Disclosure: Long XOM, IBM, BNS, K
- A long streak of dividend growth is an indication of a business with exceptional fundamentals
- Historical changes of the S&P Dividend Aristocrats
- Where are the original Dividend Aristocrats now?
- Dividend Champions Index – Five Year Total Return Performance
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