It is well-documented that a significant portion of the historical equity returns are a result of reinvested dividends. In Triumph of the Optimists: 101 Years of Global Investment Returns (2002), the authors looked at equity returns from capital gains and dividends from 1900 to 2000. They determined that performance in any given year was driven by capital appreciation, but long-term returns were largely the result of reinvested dividends.
Below are several select companies that recently decided give their shareholders more cash to reinvest through increased dividends:
- Community Bank System (CBU) Boosts Qtr. Dividend 4.8% to $0.22/Share
- H&R Block (HRB) Increases Quarterly Cash Dividend By 5.3% to $0.15/Share
- Alliance Financial (ALNC) Raises Qtr. Dividend 8.3% to $0.26/Share
- Evans Bancorp (EVBN) Boosts Semi-Annual Dividend 10.8% to $0.41/Share
- Joy Global (JOYG) Increases Quarterly Dividend by 17% to $0.175/Share
- Harris Corp (HRS) Raises Dividend 33% to $0.20/Share
- G&K Services (GKSR) Boosts Dividend 40% to $0.07/Share
After running these companies through my D4L-PreScreen.xls model, none achieved the necessary NPV of MMA Differential to justify a full evaluation. With a NPV of MMA Differential of $694, CBU was the only company in positive territory.
Disclosure: No position in any of the aforementioned stocks.
(Photo: Steve Woods)