The company is a dividend aristocrat as well as a major component of the S&P 500 index. From 1998 up until 2007 this dividend growth stock has delivered an annual average total return of 8.20 % to its shareholders.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgmbWMKEBs8BxmDahyNK-43ZQ0pCxXfgBdu0A6ziUzcSAwIj1p44l1PsxS0g35xleEg6Z7p_PvBMZFZBSY4Jb6DIeC_4TUmZZBjsJ6TLwSZiz7kkKsbFZLiuARbvOCL3Zc00TxjWUZgsgCO/s400/roh.gif)
At the same time company has managed to deliver a mediocre 2.4% average annual increase in its EPS since 1998.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgajmGqAMWbCdIJ1-irzCpz6Q-ObVwQNMNHqOoD9nmqIPlUNsS2fU1Z5XXm7w-xrhWnWfF8-bIdXpxtQyj651_aW6Tmy53Gn0y_5hLtr0184OT0h_pRr5mxt1X-sksFsDriEAI9SY7GSwuq/s400/roheps.JPG)
The ROE has been volatile over the past decade falling as low as a negative 18% in 2002 until settling in the low 20s percent by 2007.
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Annual dividend payments have increased over the past 10 years by an average of 8.60% annually, which is above the growth in EPS. A 9% growth in dividends translates into the dividend payment doubling almost every 8 years. If we look at historical data, going as far back as 1989, ROH has actually managed to double its dividend payments every nine years.
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If we invested $100,000 in ROH on December 31, 1997 we would have bought 3277 shares (Adjusted for a 3:1 stock splits in 1998). In February 1998 your quarterly dividend income would have been $546.18. If you kept reinvesting the dividends though instead of spending them, your quarterly dividend income would have risen to $1525.88 by October 2007. For a period of 10 years, your quarterly dividend income has increased by 122 %. If you reinvested it though, your quarterly dividend income would have increased by 179%.
![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjR7p-aXEsN7RgN01yjp7JGhdQwmKO6XG8l9ba-9uYfHjOm2M7w00sasRXpIaTwMnzXWSjR8pVrlEBZjy0Y5pYZeBK2GdiKJa3Ljr1OB0cpZFLkPWh-MxSmu9Nc10XfDwG0ufXMLqyl9bg6/s400/rohqtrlyincome.JPG)
I think that ROH is attractively valued with its low price/earnings multiple of 18 and above-average yield at 2.60%. I think however that the best strategy in accumulating ROH is to spread my purchases over four payments as opposed to investing all my money at once. I would be a buyer at current prices, at dividend yields at 3%, 3.50% and 4% in order to compensate for the lack of any significant EPS growth over the past decade. At 1.48 Dividends per share, the levels come up to $49.33, $42.29 and $37.
Disclosure: I do not own shares of ROH
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