Two 100-Year-Old Dow Dividends

Dividends Crush the Market

Over half of the Dow Jones Industrial Average’s return since 2001 is from dividends. • The compounding effects of dividends are one of the best ways for investors to beat the stock market. • Two Dow companies have paid a dividend for over 100 straight years: Procter & Gamble and DuPont.

Procter & Gamble’s Dividend History

Procter & Gamble has paid a dividend every year since it was founded in 1890. • P&G’s dividend has increased for 58 straight years. • The current quarterly payout of $0.6436 per share equates to a 3.2% yield for investors.• P&G’s payout ratio, or percentage of earnings paid in dividends, has risen recently but is still a comfortable 62%.

The Products Behind a Power Dividend

Procter & Gamble’s main business is selling consumer staples.• Products like Charmin, Pampers, and Tide are products that are stable through good times and bad. • This stable business allows P&G consistent cash flow for dividends.

DuPont’s Sneaky Strong Dividend

DuPont has paid a dividend for 439 straight quarters (110 years).• Current quarterly dividend of $0.45 per share leads to a 2.8% yield.• Payout ratio has consistently been around 60% for the past decade (except a short time during the recession).

DuPont’s Dividend Growth

DuPont has grown its dividend over time, but not every single year like P&G has done.

What Drives DuPont’s Dividend

DuPont is driven by three main businesses.• Agriculture accounted for 43% of sales and 64% of operating income last quarter.• Performance Materials was 16% of sales and 13% of operating income last quarter.• Performance Chemicals accounted for 15% of sales and 9% of operating income last quarter.•DuPont plans to spin off the Performance Chemicals business but is considering other alternatives, such as a sale.

Creating a Market Beater

When including dividends, DuPont has narrowly lagged the Dow since the early 1970s, while P&G has crushed the market.

What It Takes to Create a Century-Long Dividend

There are three keys to long-lasting dividends.

• Stable core business (e.g., consumer staples and agriculture)• Reliable profits

• Management focus on shareholder value and dividends

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