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  • What Happened To The Class Of '89 Dividend Aristocrats? 0 comments
    Apr 23, 2014 7:10 PM | about stocks: KO, PG, MMM, JNJ, CL, GPC, PH, TMK, LOW, EMR, DOV, IFF, BAX, K

    There were 26 Dividend Aristocrats in 1989. Of these 26, 5 were removed from acquisitions, 6 were removed due to not increasing their dividends, 4 were removed due to reducing dividend, 7 are still on the list, and 4 were removed for unknown reasons

    Acquisitions

    Ticker

    Name

    Year Removed

    Acquiring Firm

    CSR

    Central & Southwest Corporation

    1998

    American Electric Power

    HI

    Household International

    2003

    HSBC

    RBD

    Rubbermaid

    1999

    Newell

    WLA

    Warner-Lambert

    2000

    Pfizer

    AMP

    AMP Inc.

    1999

    Tyco

    No Dividend Increase

    Ticker

    Name

    Year Removed

    AHP

    American Home Products (changed to Wyeth in 2002)

    2002

    K

    Kellogg

    2003

    LDG

    Longs Drug Stores

    1995

    PH

    Parker-Hannifin Corp.

    1990

    WIN

    Winn-Dixie

    2000

    TXU

    Texas Utilities Company

    1995

    Reduced Dividend

    Ticker

    Name

    Year Removed

    BAX

    Baxter International Inc.

    1998

    FPL

    Florida Power & Light (Changed to NextEra Energy: NEE)

    1995

    IFF

    International Flavors & Fragrances

    2001

    NSI

    National Service Ind.

    1999

    Still on List

    PG

    Ticker

    Name

    DOV

    Dover Corp.

    EMR

    Emerson Electric

    JNJ

    Johnson & Johnson

    KO

    Coca-Cola

    LOW

    Lowe's Companies

    MMM

    3M

    Procter & Gamble

    Reason for Removal Unknown

    Ticker

    Name

    Year Removed

    CL

    Colgate-Palmolive

    1990

    GPC

    Genuine Parts Company

    2002

    MAS

    Masco Corporation

    1996

    TMK

    Torchmark Insurance

    1996

    Unknown Review

    CL & GPC have raised their dividend every year since their inclusion on the dividend aristocrats list in 1989 per Yahoo! Finance. Colgate-Palmolive's investor relations claims that they have not reduced dividend payments in this time period. CL & GPC were both re-added to the dividend aristocrats lists in 2012. If you include CL & GPC, 9 businesses out of 26 would have paid uninterrupted dividends to shareholders since 1989.

    Masco Corporation was removed from the list in 1996 despite increasing its dividend. It should have been removed from the list much later, in 2009, when it reduced its dividend. Why it was removed in 1996 is a mystery.

    Torchmark was removed from the list in 1996, despite increasing its dividend for the year. It should have been removed much later, in 2006 when it froze its dividend. The business has not cut its dividend since being included on the dividend aristocrat list to this present day.

    No Dividend Increase Review

    American Home Products/Wyeth froze its dividend from 2000 through 2004. From 2005 to 2009, the business resumed paying increasing dividends. If you did not sell on the freeze, American Home Products/Wyeth was acquired by Pfizer in 2009.

    Kellogg (NYSE:K) froze its dividend from 2001 through 2004. It has since paid increasing dividends every year since.

    I do not have sufficient data on Longs Drug Stores to know if they continued paying the same annual dividend up until the company's acquisition in 2008 by CVS. If you have data on this, please let me know and I will update accordingly.

    Parker-Hannifin's did not increase its dividend in 1989, and was removed from the index in 1990. The business has waited 2 years to increase its dividend several times, but has not reduced the dividend since being included to the dividend aristocrat index in 1989.

    Winn-Dixie froze its dividend in 1999. It decreased its dividend in 2001, and declared bankruptcy in 2005.

    Texas Utilities Company froze its dividend in 1994, and reduced it in 1995.

    Big Picture Review

    • 7 businesses are still on the list from 1989 (DOV, EMR, JNJ, KOW, LOW, MMM, PG)
    • 2 businesses should still be on the list from 1989 (CL, GPC)
    • 3 businesses have increased dividends most years without ever reducing dividend (PH, K, TMK)
    • 6 businesses were acquired (CSR, HI, RBD, WLA, AMP, AHP). AHP had frozen its dividend before being acquired
    • 1 business froze its dividend, and I don't have sufficient data to see if dividend was decreased before being acquired by CVS in 2008 (LDG)
    • 7 businesses reduced dividend (BAX, FPL, IFF, NSI, WIN, TXU, MAS). WIN & TXU froze dividend before reducing their dividend payment. MAS was removed prematurely, but reduced its dividend later

    Out of 26 businesses, 18 have paid stable or increasing dividends, or were acquired. One froze dividend and I am not sure what happened afterwards due to insufficient data. 7 businesses reduced their dividend.

    Having almost 70% of your stocks have favorable outcomes from 1989 to 2014 is a very high success rate. Investing in dividend aristocrat stocks reduces downside risk by forcing investors to seek stable businesses that return money to shareholders.

    To see the returns for the seven stocks that have been on the Dividend Aristocrats index continuously since 1989, click here.

    Sources

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Stocks: KO, PG, MMM, JNJ, CL, GPC, PH, TMK, LOW, EMR, DOV, IFF, BAX, K
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