The Story of DuPont's 110-Year-Old Dividend

DuPont has been paying a dividend since 1904 and investors looking for a long-term payout should know more about this company.

Jun 28, 2014 at 1:00PM

Long-term investors know that dividends are important to returns, but just how important they are is often overlooked. Over the past decade, nearly half of the Dow Jones Industrial Average's (DJINDICES:^DJI) return to investors has been in the form of dividends, and those who reinvested through the recession saw a return to breakeven long before the index reached its old high.

^DJI Chart

^DJI data by YCharts

Buying dividends that can last the test of time lead to not only great returns, but also increasing payouts that can be used as a great way to pay for retirement. DuPont (NYSE:DD) is one of those long-lasting dividends that's been around for since the fourth quarter of 1904 and lasted through two world wars and countless recessions. Here's how DuPont does it.  

DuPont's business
There are three large components to DuPont's business; agriculture, performance chemicals, and performance materials.  

In the ag business, DuPont is one of the leaders in seeds and pesticides that increase yields for farmers, particularly in the corn market. What the company aims to do long-term is to use its research muscle to develop seeds and related pesticides and herbicides that work together to increase yields for farmers. This increases productivity while also keeping customers in the DuPont family of products.

The chemicals and materials businesses have long been what DuPont is known for, and performance materials provides plastics and other products to transportation, industrial, and electrical/electronics end markets. The use of plastics isn't going away, and DuPont has long been on the forefront of new products to industry. Performance chemicals serves a variety of end markets and is actually marked to be spun off by DuPont.

On top of this, there are smaller businesses such as nutrition and health, industrial biosciences, and electronics and communications that are each growing into new markets that could be key for DuPont's future growth.

DuPont's long-lasting dividend
The diverse set of businesses I've pointed out, along with a core competency in leading the world in chemical, material, and agriculture research, gives a foundation for the dividend payout that's lasted for well over a century.

The dividend would nearly triple investors' return over the past 20 years if it were reinvested.

DD Chart

DD data by YCharts

and here's how the dividend payout per share has grown since the mid-1980s. The dividend isn't increased annually, as some companies do, but the payout keeps increasing, which is good for investors.

DD Dividends Paid (TTM) Chart

DD Dividends Paid (TTM) data by YCharts

Foolish bottom line
DuPont's business is more volatile than some long-term dividend payers such as 3M or McDonald's, but that's in large part because of the markets it serves and the volatility they have. Long-term, the world needs more food from less land and high-performance chemicals and materials. Those trends will help drive solid, if not spectacular, growth in earnings as well as dividends.

Top dividend stocks for the next decade
The smartest investors know that dividend stocks simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Travis Hoium owns shares of 3M, DuPont, and McDonald's. The Motley Fool recommends 3M and McDonald's. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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