Dover Corp is a dividend aristocrat as well as a component in S&P 500 index. It has been increasing its dividends for the past 52 consecutive years. Over the past 10 years the company has delivered an average total return of 3.95 % annually to its loyal shareholders.
At the same time the company has managed to deliver an impressive 9.30 % average annual increase in its EPS.
The ROE declined from a high of 45% in 1999 to a low of 9% in 2002, before rising to 17% in 2007.
Annual dividend payments have increased over the past 10 years by an average of 7.9% annually, which is slightly below the growth in EPS. An 8% growth in dividends translates into the dividend payment doubling every 9 years. If we look at historical data, going as far back as 1984, DOV has indeed managed to double its dividend payments every eight years.
If we invested $100,000 in DOV on December 31, 1997 we would have bought 2768 shares (adjusted for a 2:1 split in December 1997). Your first quarterly check would have been $263 in February 1998. If you kept reinvesting the dividends though instead of spending them, your quarterly payment would have risen to $637 by November 2007. For a period of 10 years, your quarterly dividend has increased by 110.50 %. If you reinvested it though, your quarterly dividend would have increased by 142.17%.
The dividend payout has remained below 30% for the majority of our study period with the exception of a brief spike during 2001-2003. A lower payout is always a plus, since it leaves room for consistent dividend growth minimizing the impact of short-term fluctuations in earnings.
I think that DOV is attractively valued with its low price/earnings multiple of 15 and low DPR. The company however boasts a below average dividend yield. I would consider initiating a position below $40.
Disclosure: I do not own shares of DOV
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