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Sorry I hide my true identity but I'm a physicist/engineer, native contrarian and idea generator. I am an eclectic dividend investor with motto "In God We Trust, All Others Pay Cash" applied to companies I invest in. I like to read /and read a lot - did you look on my SA photo 8-)? /... More
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  • Dividend Heritage Project: 2 WiP  14 comments
    Nov 12, 2012 2:17 AM

    Here is report of work in progress (WiP) of Dividend Heritage Project

    12 July 2012

    More than 3000 US companies paid flat (constant) or growth dividends at least 4 consecutive years. Some distributions are shown below.

    (click to enlarge)

    Historical comparison: Oldest Dividend Champions vs. Oldest dividend payers:

    (click to enlarge)

    As anybody can see dividends runs are more stable when a firm sustain more than ~ 25 years of flat or growth dividends.

    Diebold Inc. has the longest history (about 60 years) of growth dividends (according David Fish's CCC list) while some companies paid dividends for more than century.

    About 1600 firms were qualified for David Fish's CCC list at some moments of time. Now this list contains about 450 companies. IMO it confirm that "buy & forget" approach doesn't work for DGI.

    20 July 2012

    About 500 companies from 1600 mentioned stopped to pay dividends - about 55% of them were acquired by private or public companies and about 45% suspended dividends. Some of public companies that bought these 500 mentioned companies are current dividend champions or well-known firms like Berkshire Hathaway.

    11 November 2012

    I recently read 2 interesting papers

    "A New Historical Database for the NYSE 1815 to 1925: Performance and Predictability" by William N. Goetzmann, Roger G. Ibbotson, and Liang Peng as well as "Samuelson's Dictum and the Stock Market," by Jung Jeeman and Robert Shiller published in Economic Inquiry, 2005, Vol. 43, No. 5, pp. 221-228.

    I'd like to point 3 facts from these papers:

    1) During long run dividend change rate (DCR) was mostly positive for US stocks /see fig. 1 from the paper below/

    (click to enlarge)

    and DCR negatively correlate with yield for yield below about 15%.

    2) Only 49 firms have continuous information in Center for Research on Security Prices database during the period from 1926 to 2001. Also there are 125 firms that have existed during the 1949-2001 period without any missing information on stock prices and dividends. Also Poterba and Summers (1988) found 82 survival firms during the 1926-85 period in the CRSP tape. The small numbers here apparently reflect the continuing disappearance of firms through time due to liquidation, acquisition, reorganization. Hence "Buy & Hold (and Forget)" approach doesn't work for individual stocks (although in may work for any index fund of stocks in country with quite stable economy /e.g., compare US with Gemany in XX century/).

    William N. Goetzmann, Roger G. Ibbotson, and Liang Peng accompanied their paper with database I played with. I tried to find examples of consistent dividend growth policy in firms that were traded in NYSE from 1815 to 1925. From 515 firms listed in the database only 16 firms had 5-6 years of dividend streaks (see fig. below)

    (click to enlarge)

    Assuming that information is incomplete probably slightly more firms /see 2) above/ had dividend growth streaks but it seems that such events were very rare and streaks were quite short (probably less than 15 years).

    The facts 2) and 3) probably show that I should limit the timeline of Dividend Heritage Project to shorter period than I initially wanted to investigate.

    26 Feb. 2013

    Distribution of quarterly changes in dividends (excluding no change) for all publicly traded US firms paying regular quarterly dividends between 1980 - 2005 is shown in Fig. 1(2/26/13) below. Please note that dividend of ALL firms i.e., totally 113,955 dividend events are considered.

    (click to enlarge)

    Fig. 1(2/26/13)

    Quite many cuts are 50% reduction of dividends (100% cut = dividend omission). Most of dividend increases are equal to 1,2,3,5 and 10 cents and they are within 5%-20%.

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Comments (14)
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  • Interesting study. Oddly, my biggest money makers (dividend-wise) over the last 25 years are NOT on your list: companies like MO and T. In fact, I own none from your first chart and two (ED and JPM) from your second.


    So I do not use longevity of div payouts as a primary rule for buying stocks. But I'm sure it works for you and others.
    13 Jul 2012, 03:57 PM Reply Like
  • MO and T have 43 and 30 year streaks and it may be that there's some kind of "optimal" period that suggests the most persistent growth...say the 15th to 45th years or 10th to 30th...rather than the very longest streaks. But that's just a notion. I'm not sure what measures could be devised for "strength" of the various parts of a streak.
    13 Jul 2012, 11:57 PM Reply Like
  • Author’s reply » MO had huge special dividend that might affect your "biggest money makers"
    16 Jul 2012, 01:02 AM Reply Like
  • I don't think that MO actually paid any "special dividends," but what you may be referring to is the way Yahoo (and possibly others) show the value of spin-offs as dollar amounts. MO spun off Kraft in 2007 and Philip Morris International in 2008...but they are shown as the dollar-equivalent amounts in the MO dividend history.
    16 Jul 2012, 01:25 PM Reply Like
  • Author’s reply » You are probably right - I don't follow MO. Yahoo shows
    6/11/2008 0.29
    3/31/2008 51.060001
    3/17/2008 0.75
    12/21/2007 0.75
    9/12/2007 0.75
    6/13/2007 0.69
    4/2/2007 21.909
    3/13/2007 0.86


    BTW, I exclude cases as 6/13/2007 and 6/11/2008 above from dividend cuts
    16 Jul 2012, 07:15 PM Reply Like
  • Notice that the 3/31/08 and 4/2/07 events were outside the usual pattern, where dividends were paid about the 11th-13th of March, June, Sept., and Dec. That's because they weren't dividends at all, just the spin-offs of KFT and cash involved. So those two items should be disregarded as dividends, which they weren't.
    16 Jul 2012, 10:36 PM Reply Like
  • Author’s reply » Ok, I'll discharge.


    I'll calculate dividend change rates and need to recognize special dividends. Simplest way is to flag any DCR > some number e.g. 5 (any suggestion on value-?) and then manually investigate each case.
    A better way proposals are welcome.
    17 Jul 2012, 10:02 AM Reply Like
  • I'm not sure what DCR>5 would mean. I guess an example like MO means that it would be a good idea to know what spin-offs took place and completely disregard the equivalent "dividend" shown by Yahoo.
    17 Jul 2012, 11:06 AM Reply Like
  • Author’s reply » Dividend change rate (DCR) = ( (Div in year T+1) - (Div in year T))/ (Div in year T)
    17 Jul 2012, 11:52 AM Reply Like
  • '''BTW, I exclude cases as 6/13/2007 and 6/11/2008 above from dividend cuts '''


    Not only are they not cuts, but the lower dividend following those events is also not a cut, because the dividend was allocated proportionally amongst MO and the spinoff (KFT and PM respectively).


    A similar "special dividend" is seen with PG and the spinoff of (I think it was) Jif and Folgers to SJM in 2002(?) but without the subsequent apparent reduction in dividends.
    17 Jul 2012, 10:05 PM Reply Like
  • Author’s reply » mostserene1:
    Thank you for interest. The project goal is to learn from history and at this stage of the project I do NOT recommend any company.
    I listed companies with longest dividend histories just as my curiosity result. I also "do not use longevity of div payouts as a primary rule for buying stocks".
    I started to use DGI in 2006 and think it is too early for me to point leaders.
    13 Jul 2012, 06:01 PM Reply Like
  • Author’s reply » I probably should NOT be specific on company.
    I will not treat D(Tn+1)<D(Tn-1) as a dividend cut if D(Tn)>>D(Tn-1)
    where D is dividend in $ and Tn-1, Tn and Tn+1 are 3 consecutive years. I will use a round number (like 3 or 5) for D(Tn)/D(Tn-1) to select special dividends.
    On the first glance just from dividends vs time curves I think LXP, HRS, HRC, ELS, DUK paid special dividends and then reduced regular dividends but each case should be investigated for spin-offs and other events. As I stated in the initial post on the project I hope fellow investors will help to figure out such nuances.
    17 Jul 2012, 10:44 PM Reply Like
  • Not sure about the others, but I know that DUK spun off Spectra Energy (SE), so there was no actual reduction, just an adjustment to two companies paying dividends.
    17 Jul 2012, 11:54 PM Reply Like
  • Author’s reply » Thank you, David.
    18 Jul 2012, 01:47 PM Reply Like
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