Have you ever considered the generational divide within the Dividend Aristocrat universe? Splitting those companies into dividend raising Boomers and GenXers? With its recent announcement, Procter & Gamble (PG) has raised its dividend for 56 consecutive years, a feat match by only a handful of other dividend achievers; Dover Corp. (DOV), Emerson Electric (EMR) and Genuine Parts (GPC). But how does the PG quality yield of 3.19% compare to quality GenXer yields?
To find out, I divided the Aristocrat universe into companies that have increased their dividends starting prior to 1965 and those that have annually increased dividends beginning between 1966 and 1982. I put a 3% floor on the yield.
Boomer's Rock
Eleven companies qualify as dividend boomers, and three of these graying companies are worth watching: Emerson Electric , Proctor & Gamble, and Johnson & Johnson (JNJ). From process management to tools, EMR is the quintessential industry play. With 55 years of dividend increases, management's commitment to its shareholders has encompassed wars, recessions, oil embargos and tech bubbles. It last increased its dividend payment in Nov. 2011, an increase of over 15%. Based on earnings per share, both JNJ and PG took steps back in their recent fiscal years, but have managed to increase payouts to shareholders. JNJ last raised its dividend in March 2011 by less than 6%, while PG increased by 7%, with its recent announcement.
Boomer Dividend Payers | Ticker | Div. Increases | Est. Yield |
Dover Corp | DOV | 56 yrs. | 2.07% |
Emerson Electric Co | EMR | 55 yrs. | 3.19% |
Genuine Parts Co. | GPC | 56 yrs. | 3.15% |
Procter & Gamble | PG | 55 yrs. | 3.19% |
3M Co | MMM | 54 yrs. | 2.75% |
Cincinnati Financial | CINF | 51 yrs. | 4.75% |
Coca-Cola Co | KO | 50 yrs. | 2.84% |
Johnson & Johnson | JNJ | 49 yrs. | 3.59% |
Lowe's Cos Inc | LOW | 49 yrs. | 1.77% |
Colgate-Palmolive Co. | CL | 49 yrs. | 2.55% |
Illinois Tool Works | ITW | 48 yrs. | 2.63% |
GenXer's Roll
Five of the 27 companies which I qualified as dividend GenXers met my quality and yield criteria; Sysco, (SYY), Abbot Labs (ABT), PepsiCo (PEP), Consolidated Edison (ED), and Clorox (CLX). I have regularly watched the first three. Founded in 1969, SYY has been paying and increasing its dividend for 43 years, most recently increasing the payout almost 4% in January 2012. As a large North American food distributor, SYY wasn't immune to the great recession and its slow recovery, and its recent dividend increase did reflect those challenges. ABT continues to make headlines with its pending break-up. Raising its dividend for the 40th straight year, in April 2012 by over 6% continued to be a testament to this healthcare giant's shareholder focus. In the generational cola-war dividend battle, PEP maintains a slight yield edge over Coca-Cola Co (KO) 3.17% to 2.84%.
GenX Dividend Payers* | Ticker | Div. Increases | Est. Yield |
Stanley Black & Decker | SWK | 44 yrs | 2.14% |
Target Corp | TGT | 44 yrs | 2.00% |
Sysco Corp | SYY | 43 yrs | 3.62% |
Becton, Dickinson & Co | BDX | 40 yrs | 2.30% |
Abbott Laboratories | ABT | 40 yrs | 3.27% |
PepsiCo Inc | PEP | 39 yrs | 3.17% |
Automatic Data Processing | ADP | 37 yrs | 2.77% |
Consolidated Edison Inc | ED | 37 yrs | 4.16% |
Wal-Mart Stores | WMT | 37 yrs | 2.50% |
Walgreen Co | WAG | 36 yrs | 2.57% |
Family Dollar Stores Inc | FDO | 35 yrs | 1.17% |
McDonald's Corp | MCD | 35 yrs | 2.70% |
Clorox Co | CLX | 34 yrs | 3.35% |
Medtronic Inc. | MDT | 34 yrs | 2.60% |
*not all inclusive list |
No real generational dividend divide
Whether your favorite company is a Boomer dividend payer or a GenXer, age doesn't seem to have any benefits when it comes to finding quality companies with consistent dividends. As we continue to watch increased volatility and anticipate additional dips, all six of the companies mentioned (EMR, PG, JNJ, SYY, ABT and PEP) should be watch-list candidates. As an educational aside, these companies also make for great investment conversation starters with those GenYers around you. You know, so you can show them how dividends were grown back in the day.
Clients I advise are long EMR, PG, JNJ, ABT, PEP, SYY.
Disclaimer: The above article has been written utilizing data from publicly available sources, which are believed to be reliable, and is provided for informational and educational purposes only. Investors should consider their personal situation and become intimately familiar with any investment, including its prospectus, before investing. Past performance and current yields are no guarantee of future results.
