Yawn -- The Tedium of Dividend Increases: 56 Years and Counting at Genuine Parts, Current Yield 3.2%
Genuine Parts (GPC) directors have boosted the company’s dividend payout annually for the past 56 years -- since Ike was in the White House. That more than qualifies the auto parts distributor for inclusion among the fifty-some companies known as “dividend aristocrats,” S&P 500 components that have raised their dividends for at least 25 consecutive years.
GPC Dividend data by YCharts
Over time, steady div hikes amplify the dividend yield that long-term holders receive. In the case of Genuine Parts, shares purchased six years ago (when the stock was trading at $41.16, and the yearly dividend was $1.35) offered a yield of 3.28% at the time. Now, with the stock at ($60.08) and the yearly dividend up to $1.98, the shares bought in mid-2006 are now providing an effective yield of 4.8%.
Since the market bottomed out a few years ago, Genuine Parts outperformed the S&P 500.
Genuine Parts’ automotive group serves as a wholesale provider to NAPA brand stores, which specialize in selling parts to auto-repair shops; the company also owns a large number of NAPA stores outright. While margins in the distribution sector are never fat, at Genuine Parts they’ve bounced back to pre-downturn levels.
GPC Profit Margin data by YCharts
Genuine Parts typically covers its dividends without much strain.
GPC Payout Ratio TTM data by YCharts
The company generally throws off plenty of cash, and it’s been boosting its cash cushion in the past couple years.
GPC Free Cash Flow data by YCharts
With interests rates so low for so long, investors are increasingly turning to dividend stocks. Buying a stock for its dividend stream also means acquiring the underlying security, however, and before committing to any stock it’s important to study up on the company’s fundamentals, and to read through its 10-K.
James P. Miller is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.
Filed under: Company Analysis
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