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S&P's Dividend Aristocrats

Posted: Jul 29, 2009 12:44 PM by Aryeh Katz

Tickers in this Article: BMS, EMR, MHP

Standard & Poors is a private market intelligence company that for years has provided investors with information on dividends. One of the data sets they offer is called the 'Dividend Aristocrats' list, a tally of all American, publicly-traded companies that have consistently increased their dividend payments for 25 years or more.

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Before discussing a few of these issues below, consider the following point. Since 1989, the dividend aristocrats have outperformed the S&P 500 by 1.3% annually, averaging returns of 12.93% vs. the index's 11.66% per year. Of the 51 companies currently on the list we offer here a smaller sampling. One on the list is a new addition to the world of dividend nobility, while two are of the 'older money' persuasion.

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Newcomer to Dividend Elite
Bemis Company, Inc. (NYSE:BMS), a manufacturer of industrial packaging products, was recently added to the list of aristocrats after a long history of generously rewarding shareholders. The company has paid annual dividends since 1922, quarterly payouts since 1931 and has raised the quarterly distribution every year for 26 years.

Bemis stock now pays 3.4% annually and is up over 50% from lows struck in March. It trades at a price-to-sales ratio of just 0.74. In a move that will greatly increase the company's sales in the food and beverage industry, Bemis recently acquired Alcan Packaging Food Americas for $1.2 billion.

'Lord' Emerson has 50-Year History
Emerson Electric Co. (NYSE:EMR) is an old-line aristocrat, having paid dividends to investors for 62 straight years and increasing them for the last 52. Emerson pays a current annual yield of 3.6% and trades with a trailing P/E multiple of 13.17x. The company offers a wide range of electronic products and engineering services predominantly to industrial clients worldwide.

Last week, Emerson closed a deal with Secure Energy of St. Louis to build a coal gasification plant in Illinois that Emerson will subsequently operate. Company stock is up 50% in just over four months.

Self-Reporting Dividend Aristocrat
The McGraw-Hill Companies (NYSE:MHP) are providers of both print and online information, and are owners of the aforementioned Standard & Poors. The company's stock pays 2.7% annually and trades with a P/E of 13.20.

McGraw Hill has increased their quarterly dividend payment for 36 consecutive years and has a record of regular payments since 1937. The compound annual dividend growth rate on the payout amounts to 10.1% since 1974. McGraw Hill was founded in 1888.

The Wrap
The 'Dividend Aristocrats' have a record of outperforming the broader market and providing extraordinary returns on an annual compounded basis over the long term. The above three issues present just a sampling of what the world of investment aristocracy has to offer. (To learn more, check out Dividend Facts You May Not Know.)

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By Aryeh Katz

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