Dividend Growth Stock Overview: Stepan Company

Stepan Company manufactures chemicals used in laundry detergent.
Photo courtesy Jeepers Media/flickr.com.

About Stepan Company

Stepan Company produces specialty and intermediate chemicals that are used in a variety of end products. Stepan Company products are used in the manufacture of toothpaste, soap and detergent, and in the production of shale oil and oil sands. The company is headquartered in Illinois and employs over 2,000 people worldwide.

Stepan Company has three reportable business segments: Surfactants, Polymers, and Specialty Products.

The term surfactant is a contraction of “surface active agent”.  Surfactants are chemicals that affect how two liquids or a liquid and a solid interact; for example, they enable water to remove soil from another surface.  The Surfactants segment produces these chemicals, which are a basic cleaning agent in detergent, shampoo, soap, toothpaste, and cosmetics.  Stepan also sells surfactants to end users in the enhanced oil recovery markets.  This business segment produces about two-thirds of total company sales and about 45% of total company operating income.  More than 60% of the segments sales are in the North American market, with another 20% in the European market.

Polymers are large chemicals composed of repeating smaller molecules.  They are used to manufacture rigid foam for thermal insulation in the construction industry, and as a raw material base for coatings, adhesives and sealants.  They are also used in the manufacture of appliances.  The Polymer segment provides about a third of total company sales and about 45% of total company operating income.

Finally, the Specialty Products segment produces chemicals used in food products and pharmaceutical applications.  This segment provides the remaining company sales and operating income.

The Specialty Products segment includes the operations of the Maywood, New Jersey manufacturing plant, which was acquired by Stepan when it purchased the Maywood Company in 1959. This facility has the distinction of being the only legal importer of coca leaves in the United States. This facility extracts cocaine from the coca leaves and sells the cocaine-free extract to The Coca-Cola Company for use in their eponymous product. The extracted cocaine is sold to Mallinckrodt Inc., a St. Louis-based pharmaceutical manufacturer, which purifies it into cocaine hydrochloride. Mallinckrodt is the only company in the United States licensed to purify cocaine for medicinal purposes. Eye and ear, nose and throat specialists use the cocaine hydrochloride as a local topical anesthetic.

The company is a member of the S&P Small Cap 600 and Russell 2000 indices and trades under the ticker symbol SCL.

Stepan Company’s Dividend and Stock Split History

Stepan Company has increased dividends since 1968. The company announces annual dividend increases in mid-October; the stock goes ex-dividend at the end of November.

Stepan has compounded its payout at an average rate of 7.7% over the last 5 years and 7.4% over the last 10 years.

Stepan Company has split its stock 5 times, each time 2-for-1. The most recent stock split was in November 2012. Prior to that, Stepan split its stock in December 1994, December 1988, December 1981, and September 1972. Had you owned a single share of Stepan Company stock through all 5 stock splits, you’d now have 32 shares.

Stepan Company’s Direct Purchase and Dividend Reinvestment Plans

Stepan Company does not have a direct purchase or dividend reinvestment plan. In order to invest in the company’s stock, you’ll need to purchase it through a broker; most will allow you to reinvest dividends without any fee. Ask your broker for more information on how to set this up if you are interested.

Helpful Links

Stepan Company’s Investor Relations Website

Current quote and financial summary for Stepan Company (finviz.com)

 

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