What Does the Dollar Tree Acquisition of Family Dollar Mean for This Dividend Aristocrat?

Monday morning, Dollar Tree (DLTR) announced that they would acquire Family Dollar (FDO) in order to form one of the largest discount retailers across the U.S. and Canada, with over 13,000 stores.  Dollar Tree, which will continue to operate the Family Dollar brand, is paying $8.5 billion in cash and stock for the discount retailer.

Family Dollar is one of 54 Dividend Aristocrats, having increased dividends for 38 years.  For dividend investors though, owning Dollar Tree will be a disappointment as they do not pay a dividend.

And Then There Were 53…

Family Dollar stock will continue to trade until shareholders vote on the proposal.  Once this happens, S&P will have to decide how to designate Dollar Tree.  Dollar Tree is likely to inherit Family Dollar’s designation as a Dividend Aristocrat, however this will last until Dollar Tree neglects to pay a dividend.  If Dollar Tree continues its current dividend policy, i.e., not to pay a dividend, there will be 53 S&P Dividend Aristocrats remaining.

I’ll keep Family Dollar up on the list of Dividend Aristocrats until the stock stops trading.

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