The Dividend Achievers Index includes 238 businesses (at the time of this writing) that have increased their dividend payments for 10 or more consecutive years. To be eligible for inclusion in the Dividend Achievers Index, a stock must be a member of the NASDAQ US Benchmark Index, as well as meet certain minimum liquidity requirements. Over the next several months to a year, I will analyze each of the businesses in the Dividend Achievers Index to determine each company's competitive advantage (or lack thereof), future growth prospects, and current events.
The Dividend Achievers index is an excellent place to look for high quality businesses with shareholder friendly managements. Increasing dividend payments for 10 or more consecutive years requires a business have strong cash flows and a management team that is willing to reward shareholders through continuously rising dividend payments. The 10 year history includes the Great Recession of 2007 to 2009; all Dividend Achievers managed to raise their dividend payments throughout the Great Recession.
The first Dividend Achiever I will analyze is Arm & Hammer producer Church & Dwight (CHD). Church & Dwight was founded in 1846 and has grown to a market cap of over $10 billion over the last 160+ years. The company has not reduced its dividend payments since it started paying dividends in 1990. Church & Dwight will have reached 25 consecutive years of dividend payments without a reduction by 2015. This means as of January, it will pass the first of The 8 Rules of Dividend investing, which is a stock can have no dividend reductions in the last 25 years. This rule sets the bar for safety and consistency very high; two facets of high quality businesses which are too often ignored. Church & Dwight's business operations are analyzed below.
Business Overview
Church & Dwight generates about 60% of its profits from 4 key brands: Arm & Hammer, OxiClean, Trojan, and VitaFusion/Lil'Critters vitamins. In addition, the company owns the following brands: Xtra laundry detergent, First Response pregnancy kits, Nair hair remover, Spinbrush, and Orajel. Church & Dwight breaks its operations down into 3 separate categories. Each category is shown below along with the percent of total sales each segment has generated for Church & Dwight through the first 9 months of fiscal 2014:
The Consumer Domestic segment sells Church & Dwight's strong consumer brand products in the US. The Consumer International segment sells the company's consumer brand products outside the US. The Specialty Products segment produces and sells sodium bicarbonate (baking soda) and other inorganic chemicals for industrial, institutional, and medical applications.
