S&P 100 Shakeout June 2004 to June 2011

by: Fredrik Arnold

While searching for a suitable stock index to test the dividend dogs of the index investing strategy, my web surfing uncovered a June 2004 list of S&P 100 stocks. This index is composed of 100 major, blue chip companies from major enterprise sectors and is represented by the ticker symbol OEX. Much like an investor managing a portfolio to maximize gains, the S&P Index Committee manages its list for size and diversity.

The committee, a team of Standard & Poor’s economists and index analysts who meet on a regular basis, use eight criteria to qualify a stock for addition to the S&P 100 list. Investors would be well served to adopt similarly stringent rules and high standards for stocks included in their own portfolios. Here are the S&P 100 criteria:

  • Inclusion in the S&P 500 list
  • Maintain exchange-listed options
  • Be a U.S. company for operations, accounting standards, corporate structure, and exchange listings
  • Have market capitalization in excess of the minimum S&P 500 standards
  • Have public float of at least 50%
  • Exhibit financial viability with at least four consecutive quarters of positive as-reported earnings
  • Have adequate liquidity and reasonable stock price
  • Achieves sector balance in line with the S&P 500

The committee states that it strives to minimize unnecessary turnover in index membership and lists just two criteria for removal:

  • Violation of one or more criteria for inclusion
  • Merger, acquisition, or restructuring significant enough that a company no longer meets inclusion criteria

The 2004 S&P 100 constituent list underwent 50 documented addition and removal announcements leading to the current June 2011 list. The 39 companies added over the past seven years that remain on the current June 2011 index are shown in bold.

# Rank, Date, Deletion, Addition

1. 06/302004: Bank One Corp (NYSE:ONE), Dell Inc. (NASDAQ:DELL)

2. 10/29/2004: Boise Cascade (NYSE:BCC), Office Max (NYSE:OMX)

3. 03/24/2005: Sears Roebuck & Co (NYSE:S), Comcast Corp. (NASDAQ:CMCSA)

4. 07/21/2005: Toys R Us Corp. (TOY), Target (YGT)

5. 08/12/2005: Nextel (NXTL), Sprint Nextel (S)

6. 08/18/2005: Delta Airlines (NYSE:DAL), Caterpillar Inc. (NYSE:CAT)

7. 08/29/2005: May Dept. Stores (NYSE:MAY), Abbot Laboratories (NYSE:ABT)

8. 09/30/2005: Gillette Co.

9. 10/03/2005: Chevron (NYSE:CVX)

10. 11/08/2005: SBC Communications (merged with AT&T (NYSE:T))

11. 11/18/2005: United Parcel Service (NYSE:UPS)

12. 12/30/2005: Viacom Class B (VIA.B), CBS Corp. (NYSE:CBS)

13. 01/11/2006: Morgan Stanley (MWD), Morgan Stanley (NYSE:MS)

14. 11/03/2006: RadioShack (NYSE:RSH), Regions Financial Corp. (NYSE:RF)

15. 09/29/2006: Unisys (NYSE:UIS), Wachovia Corp. (NASDAQ:WB)

16 11/17/2006: HCA Inc.(NYSE:HCA), Google (NASDAQ:GOOG)

17. 11/30/2006: Lucent Technologies (LU), ConocoPhillips (NYSE:COP)

18. 11/30/2006: Office Max (OMX), Capital One Financial (NYSE:COF)

19. 03/22/2007: Black & Decker (BDK), CVS Caremark (NYSE:CVS)

20. 03/30/2007: Eastman Kodak (EK), Kraft Foods Inc. (KFT)

21. 05/31/2007: Medimune Inc (MEDI), Apple Inc. (NASDAQ:AAPL)

22. 06/29/2007: National Semicond (NYSE:NSM), Covidien Ltd. (COV)

23. 06/29/2007: Computer Sciences (NYSE:CSC), Bank of NY Mellon (NYSE:BK)

24. 10/24/2007: Limited Brands (LTD), NYSE Euronext, Inc. (NYSE:NYX)

25. 01/28/2008: Harrah's Ent (HET), Unitedhealth Group (NYSE:UNH)

26. 03/31/2008: Allegheny Tech (NYSE:ATI), Phillip Morris International (NYSE:PM)

27. 04/22/2008: Rockwell Autom'n (NYSE:ROK), National Oilwell Varco Inc. (NYSE:NOV)

28. 07/17/2008: General Motors (NYSE:GM), MasterCard Inc. (NYSE:MA)

29. 07/30/2008: Clear Channel (NYSE:CCU), Qualcomm Inc. (NASDAQ:QCOM)

30. 09/16/2008: Lehman Brothers (LEH)

31. 09/19/2008: Occidental Petroleum Corp. (NYSE:OXY)

32. 11/18/2008 Anheuser-Busch (NYSE:BUD), Wyeth (WYE)

33. 12/19/2008: Cigna Corporation (NYSE:CI), Nike (NYSE:NKE)

34. 12/19/2008: The AES Corp. (NYSE:AES), Lockheed Martin Corp. (NYSE:LMT)

35. 12/19/2008: El Paso Corp. (EP), Devon Energy Corp. (NYSE:DVN)

36. 12/19/2008: CBS Corp. (CBS), Lowe's Companies Inc. (NYSE:LOW)

37. 12/19/2008: International Paper (NYSE:IP), Gilead Sciences Inc. (NASDAQ:GILD)

38. 12/19/2008: American Int'l. Grp (NYSE:AIG), Schering-Plough Corp. (SGP)

39. 12/19/2008: Hartford Financial (NYSE:HIG), Walgreen Co. (WAG)

40. 12/31/2008: Wachovia Corp. (WB), Costco Wholesale Corp. (NASDAQ:COST)

41. 12/31/2008: Merrill Lynch & Co. (MER), Amazon.com (NASDAQ:AMZN)

42. 03/16/2009: Tyco International (NYSE:TYC), Monsanto Co. (NYSE:MON)

43. 06/04/2009: Covidien Ltd.(COV), MetLife Inc. (NYSE:MET)

44. 10/15/2009: Wyeth Corp. (WYE), News Corp. (NASDAQ:NWSA)

45. 10/29/2009: Schering-Plough (SGP), Freeport McMoran (NYSE:FCX)

46. 02/12/2010: Burlington N'n St Fe (BNI), Berkshire Hathaway (NYSE:BRK.B)

47. 03/18/2011: Campbell Soup (NYSE:CPB), Visa (NYSE:V)

48. 03/18/2011: Sara Lee (SLE), Union Pacific (NYSE:UNP)

49. 03/18/2011: Regions Financial (RF), Emerson Electric (NYSE:EMR)

50. 03/18/2011: NYSE Euronext (NYX), Apache Corp. (NYSE:APA)

Most List Changes Happened in 2005 and 2008

More than half the shakeout in S&P 100 listings for the seven year stretch happened in 2005 and 2008. Ten announced additions or removals came about primarily due to mergers and acquisitions in 2005. Seventeen such announcements were made due to mergers, acquisitions and financial meltdowns during the great recession in 2008. Three times in those two years companies were deleted form the S&P 100 without an addition named immediately. In 2005 there were lags of three and 10 days before additions were named to replace Gillette with Chevron and SBC with UPS. In 2008 there was a lag of three days before the Lehman Bros. deletion was balanced by adding Occidental Petroleum to the list.

61 Still Standing

The following S&P 100 companies from 2004 still listed in 2011 are shown below (in ticker symbol alphabetical order) with dividend payers over 2% yield are italicized:

Alcoa (NYSE:AA); American Electric Power Co. (NYSE:AEP); Allstate Corp. (NYSE:ALL); Amgen Inc. (NASDAQ:AMGN); Avon Products Inc. (NYSE:AVP); American Express Inc. (NYSE:AXP); Boeing Co. (NYSE:BA); Bank of America Corp. (NYSE:BAC); Baxter International Inc. (NYSE:BAX); Baker Hughes (NYSE:BHI); Bristol-Myers Squibb (NYSE:BMY); Citigroup, Inc. (NYSE:C); Colgate-Palmolive Co (NYSE:CL); Cisco Systems (CSCO); Dupont (NYSE:DD); The Walt Disney Company (NYSE:DIS); Dow Chemical (NYSE:DOW); EMC Corporation (EMC); Entergy (NYSE:ETR); Excelon (NYSE:EXC); Ford Motor (NYSE:F); FedEx (NYSE:FDX); General Dynamics (NYSE:GD); General Electric (NYSE:GE); Goldman Sachs (NYSE:GS); Haliburton (NYSE:HAL); Home Depot (NYSE:HD); H.J. Heinz Company (HNZ); Honeywell (NYSE:HON); Hewlett Packard Co (NYSE:HPQ); International Business Machines (NYSE:IBM); Intel Corporation (NYSE:INT); Johnson & Johnson (NYSE:JNJ); JP Morgan Chase & Co (NYSE:JPM); the Coca Cola Company (NYSE:KO); McDonald's Corporation (NYSE:MCD); Medtronic Inc (NYSE:MDT); 3M Company (NYSE:MMM); Altria Group (NYSE:MO); Merck & Co. (NYSE:MRK); Morgan Stanley (MS); Microsoft Corp (NASDAQ:MSFT); Norfolk Southern Corp (NYSE:NSC); Oracle Corp (NASDAQ:ORCL); Pepsico Inc. (NYSE:PEP); Pfizer Inc. (NYSE:PFE); Procter & Gamble Co. (NYSE:PG); Raytheon Co. (NYSE:RTN); Schlumberger (NYSE:SLB); Southern Company (NYSE:SO); AT&T Inc. (T); Texas Instruments (NYSE:TXN); Time Warner (NYSE:TWX); US Bancorp (NYSE:USB); United Technologies Corp (NYSE:UTX); Verizon Communications (NYSE:VZ); Wells Fargo (NYSE:WFC); Williams Companies (NYSE:WMB); Wal-Mart (NYSE:WMT); Weyerhauser Co (NYSE:WY); Exxon Mobil Corp. (NYSE:XOM); Xerox Corp (NYSE:XRX).

As mentioned at the start of this article, individual investors would be well served to adopt stringent rules and high standards for stocks included in their own portfolios. That being said, a good place to start is to select stocks from indexes that have already set those standards. It is therefore possible that dividend paying stocks on the above list might be considered stable, reliable candidates in which to invest for future returns. These will be subjects of my next Seeking Alpha article.

Disclosure: I am long KFT, CVX.