8 sweetheart CEOs sharing the cash love
Investors adore the business leaders on this list. They've accomplished an amazing feat.
If you believe leadership matters, here's a group of guys to bet on:
- Thomas Linebarger, Cummins Inc. (CMI)
- Donald Washkewicz, Parker Hannifin Corp. (PH)
- Hugh Grant, Monsanto Co. (MON)
- Samual Allen, Deere & Co. (DE)
- Douglas Oberhelman, Caterpillar Inc. (CAT)
- Rex Tillerson, Exxon Mobil Corp. (XOM)
- Robert Iger, Walt Disney (DIS)
- Joe Watson, Chevron Corp. (CVX)
To put this into perspective, and bring it up (or down) to a level everyone can understand, it's like this: While many of your friends are unemployed or underemployed, you manage to deliver to your spouse a significant bump in his or her annual allowance while simultaneously increasing the savings rate of the household at large.
Do that, my friend, and see just what's waiting for you next Valentine's Day.
I arrived at this list of CEOs and companies by looking at the dividend payout ratio (DRP) over the last 10 years for all of the stocks in the S&P 500 ($SPX.X), as well as the index itself. The dividend payout ratio is the percent of earnings of a company allocated to cash dividends. It's defined as: dividends per share ÷ earnings per share. For you academics out there, the DPR is: cash common dividends ÷ (income before extraordinary items-minority Interest - cash preferred dividend) x 100.
Then I looked at the compound annual growth rate in the dividend for all the stocks in the S&P 500 over the last 10 years.
What I was looking for, specifically, were the companies where the dividend was growing at a healthy rate, while the amount of profits allocated to the dividend was shrinking at a healthy rate. At first brush, here's what I found:
* Helmerich & Payne excludes an October 2002 special dividend of $4.59, inclusive of the regular dividend.
** Marathon Oil Corp. excludes a July 2011 special dividend of $20.70, inclusive of the regular dividend.
All of these companies allocated less and less profits to dividends, yet managed to grow their annual dividend at least 5% compounded annually. But I wanted to raise the bar a little higher, so I decided to include only companies and CEOs that were able to reduce the DPR and increase their cash payout in double-digit numbers.
Click to Minyanville for larger image.
Gentlemen, my hat goes off to you.
By comparison, it's worth noting how the S&P 500 performed at large with respect to these two performance ratios. Specifically, as the chart below demonstrates, for the S&P 500, over the last 10 years, the payout ratio increased at about 1% annually, while the CAGR in cash dividends for the S&P 500 index was 6.86%.
Regrettably, I fear there are probably more than a few unsung heroes out there. Specifically, among the financial databases my firm subscribes to, we found complete 10-year dividend data on just 133 of the 500 companies that comprise the S&P 500. I left companies with incomplete data out of my analysis, as they should have been for missing dividend payments. However, some of the missing data, no doubt, stems from mergers, acquisitions and divestitures, which means that some sweetheart CEOs will have to manage with love unrequited.
Dividend data: divdata.com, Value Line Publishing, LLC.
Payout ratio formula: Bloomberg.
Current dividend yields: Capital IQ.
More from Minyanville
Fat...what are you saying? You "slide" quite a bit and most know that, here. Providing this and that...and, you are "super" rich? I will call you out as having nothing other than a computer to profess this and that. Get a man or a woman as suits you...you are a phony. Our economy stinks total and done. I will say that we are above 20% unemployed or underemployed. I believe it is 25% and more even than that .... no bs. You are not going to change the "welfare" ingrained. I am not talking those that have worked and paid into...you have two lost generations..they know nothing else, done.
Things I like....Peanut butter and Jelly..
Steaks and Burgers.
Kids and G-Kids(even better).
Investing in Good Companies....On Wall St.
And going to Casinoes occassionally.
Along with a Good woman..
A place to live...But don't need a Mansion....Would have to hire a Maid.
I consider myself very lucky..On most counts.
I spent about a year one place,once upon a time...Couldn't get a Peanut butter and Jelly Sandwich.
Couldn't get a 15 cent McDonald's burger either...
Had to put pills or tablets in our drinking water, to treat it.
Have appreciated PBJs and Burgers ever since..
And outside of coffee, good,clean water is the only thing I drink with meals.
Outside of Chevron, paying around 3.10%; None of the others, do pay that much.
Most could afford to pay at least a 1/2 % more...I'm sure the CEOs wouldn't suffer?
Much more pleasing to Shareholders..
I can offer some applause for them increasing the DIVS..
Plus, for employing LARGE number's of people.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
Do it once a year. This allows the best-performing asset classes to take off and run.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.