In doing research on Ecolab’s dividend growth history for the company summary, I came across this statement on page 6 of its 2013 annual report:
“We increased our quarterly cash dividend rate for the 22nd consecutive year, raising it 20 percent in December to an indicated annual payout of $1.10 per common share. This represents Ecolab’s 22nd consecutive annual dividend rate increase.”
So why does S&P include them in the list of Dividend Aristocrats, which require 25 years of dividend increases? The answer comes from the different definitions of how the company tracks dividend increases and the Dividend Aristocrat criteria. For the first three quarters of 1990, Ecolab paid a quarterly dividend of 2.06 cents (all dividend amounts are adjusted for stock splits). The company then increased the quarterly dividend to 2.19 cents per share in the 4th quarter, for an annual dividend payment of 8.37 cents per share. In 1991, Ecolab did not increase the dividend; rather, the company kept it at 2.19 cents per share, for a total dividend payment that year of 8.76 cents per share. In the 4th quarter of 1992, Ecolab resumed dividend increases, raising it to 2.38 cents per share in the final quarter. The total dividend payment in 1992 was 8.95 cents per share. From Ecolab’s perspective, they have raised dividends each year going back to 1992, having skipped an increase in 1991. From S&P’s perspective, and for purposes of the Dividend Aristocrat criteria, the total dividends from 1990 – 1992 increased each year and the “streak” of annual dividend growth goes back to 1986. (Ecolab did not increase their dividend payment from 1980 – 1985.)
The bottom line is that regardless of how Ecolab states it, S&P rightly includes Ecolab as a member of the Dividend Aristocrats.