Thursday, July 3, 2008

Carlisle Companies (CSL) Dividend Analysis

Carlisle Companies Incorporated engages in the manufacture and sale of construction materials in the United States and internationally. It operates in five segments: Construction Materials, Industrial Components, Transportation Products, Specialty Products, and General Industry.

The company is not a dividend aristocrat but a dividend champion. In fact, this stock never crossed my radar, untill I found about the dividend champions list. It has been increasing its dividends for the past 31 consecutive years. From 1998 up until 2007 this dividend growth stock has delivered an annual average total return of 7.70 % to its shareholders.

At the same time company has managed to deliver a 10.50% average annual increase in its EPS since 1998.

The ROE has remained in the 5% - 20% range over the past 10 years. It has regained ground from its 2001 lows.

Annual dividend payments have increased over the past 10 years by an average of 7.90% annually, which is lower than the growth in EPS. An 8% growth in dividends translates into the dividend payment doubling almost every nine years. If we look at historical data, going as far back as 1987, CSL has actually managed to double its dividend payment every ten years on average. If history could be any guide, in 2017 the quarterly dividend payment would equal $0.29/share.

If we invested $100,000 in CSL on December 31, 1997 we would have bought 4847 shares (Adjusted for a 2:1 stock split in 2007). In February 1998 your quarterly dividend income would have been $339.29. If you kept reinvesting the dividends though instead of spending them, your quarterly dividend income would have risen to $828.10 by November 2007. For a period of 10 years, your quarterly dividend income has increased by 107 %. If you reinvested it though, your quarterly dividend income would have increased by 144%.

With the exception of 2001 and 2002 the dividend payout has remained below 40% over 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 CSL is attractively valued with its low price/earnings multiple of 15 and low DPR. The yield is at my 2% threshold. The stock is currently trading way off of its highs from 2007, which presents a nice opportunity for an entry on the dip.

Disclosure: I do not own shares of CSL

Popular Posts