According to the Dividend Aristocrats Index however, which is maintained by Standard & Poor’s, Cardinal Health has managed to grow dividends for 30 years in a row.
This is an obvious disconnect. Just like with other disconnects, such as Altria and Abbott, I decided to research further in order to determine for myself the correct track record of annual dividend increases.This exercise was helpful in my monthly update process for the list of Dividend Champions that I post for my readers here.
The first step was to review press releases announcing dividend increases over the past decade, in an effort to determine what track record is being claimed by the company itself. Unfortunately, between 2007 and 2018, Cardinal Health has not stated what its track record of annual dividend increases really is.
The second step was to review the company’s dividend history using Cardinal Health’s Investor Relations website. I had to ensure I am properly adjusting for stock splits, stock dividends, and excluding one-time distributions. The dividend history was messy, as it appeared that dividends were being tracked by the company on an ex-dividend date basis, as opposed to how much actual cash per share was being distributed to shareholders.
For example, the company shows total dividends in 2017 as $1.8361/share.
Declared
|
Ex-Date
|
Record
|
Payable
|
Amount
|
11/8/2017
|
12/29/17
|
1/2/18
|
1/15/18
|
0.4624
|
8/9/2017
|
9/28/2017
|
10/2/2017
|
10/15/2017
|
0.4624
|
5/3/2017
|
6/29/2017
|
7/3/2017
|
7/15/2017
|
0.4624
|
2/2/2017
|
3/30/2017
|
4/3/2017
|
4/15/2017
|
0.4489
|
Total dividends in 2017:
|
1.8361
| |||
If you look closely, you can see that only three of those payments occurred in 2017, with the last one occurring in 2018. An investor was entitled to this dividend payment at the end of 2017, but didn’t receive it until January 2018.
A long-term investor in Cardinal Health would have received $1.8226 in total in 2017 for each share they owned. That is the cash amount they would have received in 2017 that would have been potentially taxable to the IRS.
Armed with this information, I calculated the annual dividend income based on two criteria.
The first one is based on actual cold hard cash collected in a calendar year per share of Cardinal Health. This method adjusted for stock splits and one-time dividend payments. Based on this method, Cardinal Health has raised dividends for 22 years in a row since 1996. The dividend payment in 1995 was the same as the dividend payment in 1996.
The second method is based on ex-dividend days, but still adjusted for splits and one-time distributions. Based on this method, Cardinal Health has raised dividends for 23 years in a row since 1995. The dividend payment in 1995 was the same as the dividend payment in 1994.
Today, we evaluated the dividend track record of Cardinal Health. We can see that the company has only been able to raise dividends for 22 years in a row, using calendar year cash payments. As a result, the company has correctly been excluded from the list of dividend champions today. Unfortunately, the company is included in the list of dividend aristocrats today. Based on my review of the history of the dividend aristocrats index, I have concluded that it is an incomplete list for dividend investors. Serious dividend investors should focus on the list of dividend champions, and ignore the dividend aristocrats. The real lesson to learn of course is that you should always do your homework, and try to do the work to reach your own conclusions.
Relevant Articles:
- S&P Dividend Aristocrats Index – An Incomplete List for Dividend Investors
- October 2018 Dividend Champions List
- Cardinal Health (CAH) Dividend Stock Analysis
- Dividend Aristocrats for 2018 Revealed
