Our recent focus on US Dividend Aristocrat stocks that have increased dividends every year for the past 25 years prompted a discussion with readers about which Australian listed companies have also been able to deliver an outstanding dividend history over a long period of time. Five stocks kept being mentioned - Washington H. Soul Pattinson (SOL), A.P. Eagers (APE), ARB Corporation (ARB), Ramsay Health Care (RHC), and InvoCare (IVC). The first two have been around for a long time - SOL first listed in 1903 and APE in 1957. All five stocks have served their shareholders well, with long-term growth in EPS, DPS and share price. In the full article below, I provide an overview of each and comment on the importance of competitive advantages.
Washington H. Soul Pattinson and Co. is an investment house with a diverse portfolio of assets across a range of industries. SOL's main business activities are pharmacies, retail, building materials, natural resources, equity investments, agriculture, telecommunications and corporate advisory.
A.P. Eagers Limited operates motor vehicle dealerships in Australia. APE provides full facilities including the sale of new and used vehicles, service, parts and the facilitation of allied consumer finance. APE also operates a substantial motor vehicle auction business, Brisbane Motor Auctions. APE has four operating segments - Automotive Franchised Retail, Truck Retail, Property, Investment and Other.
ARB Corporation designs, manufactures, distributes and sells four-wheel drive vehicle accessories and light metal engineering works, with manufacturing plants in Victoria and Thailand. ARB has warehouses and sales centres located in Australia, Thailand and the US, as well as distributors in over 100 countries worldwide.
Ramsay Health Care is a global hospital group operating over 220 hospitals and day surgery facilities across Australia, the UK, France, Indonesia and Malaysia. RHC facilities cater for a range of health care needs from day surgery procedures to complex surgery, as well as psychiatric care and rehabilitation.
InvoCare owns and operates funeral homes, cemeteries and crematoria around Australia, New Zealand and Singapore. Key funeral brands are White Lady Funerals, Simplicity Funerals and Singapore Casket. IVC also operates two Chinese memorial gardens, Lung Po Shan Chinese Memorial Gardens and Po Fook Shan Asian Memorial Gardens.
All five companies are likely to continue doing well operationally for many more years to come. However, their shares all look a bit expensive now. Their 12-month forward PE ratios are all above 20 times. It is possible to overpay for a good company. Although they are still worth holding for the long term we would wait for lower share prices before buying more. We can find better value among a few of the US Dividend Aristocrat stocks.
Companies that have been around for a long time have demonstrated an enduring competitive advantage. Although they can lose that advantage if they become complacent, their longevity is usually a positive sign for the future.
As the writer, Nassim Nicholas Taleb (who wrote The Black Swan and Fooled by Randomness), pointed out in his latest book Antifragile, "Books that have been around for ten years will be around for ten more; books that have been around for two millennia should be around for quite a bit of time, and so forth." He uses the Bible as an example - it is still on the best-seller list for publishers and has been since the printing press was invented. The same applies to companies - the best ones are "antifragile" and keep on keeping on. Just don't overpay for them.
Article contributed by Mason Stevens: (VIEW LINK)
Responsible for identifying domestic and international equity investment opportunities. 25 years of financial markets experience as an equity strategist, economist, analyst, portfolio manager and consultant.