Dividend Aristocrat Overview: W. W. Grainger

About W. W. Grainger

Image courtesy W. W. Grainger

Image courtesy Grainger

W. W. Grainger bills itself as a “leading business-to-business distributor headquartered in the U.S.” and that “Grainger.com provides access to maintenance, repair, and operating (MRO) supplies for over a million customers around the world.”  Grainger is a reseller of business products for industrial organizations, providing customers with items ranging from abrasives to welding equipment.

William W. Grainger founded W. W. Grainger in Chicago in 1927 as a wholesale seller and distributor of electric motors.  40 years later, in 1967, the company went public and the following year was first listed on the Midwest Stock Exchange.  In 1972 – the same year the company began increasing the annual dividend payout – the stock began trading on the New York Stock Exchange.  The company seeks to be the leader in the maintenance, repair and operating market and supplies 1.2 million different products to more than 2 million customers.  In 2013, Grainger earned $797 million on sales of $9.4 billion.

The company is a member of the S&P 500 index, a Fortune 500 company, and trades under the ticker symbol GWW.

W. W. Grainger’s Dividend and Stock Split History

Grainger has increased dividends annually since 1972 and in 1996 met the Dividend Aristocrat criteria of 25 consecutive years of dividend growth.  The company has traditionally announced dividend increases in the 2nd quarter of the year and most recently increased its quarterly dividend by 16.13%, to $1.08 from $0.93 per share.  The next dividend increase is expected to be announced in May 2015 and paid in June 2015.

Grainger has an outstanding dividend growth history and is one of the few Dividend Aristocrats that has both doubled its dividend payout over the 5-year period from 2008 – 2013 and quadrupled its dividend payout over the 10-year period from 2003 – 2013.  In 2003, the company paid a total of 73.5 cents per share; by 2008, the per-share dividend payout had increased to $1.55 and by 2013, the company paid a dividend payout of $3.59 per share.  Grainger is currently on track to pay a total of $4.17 in dividends per share in 2014.  Grainger has provided long-term investors 5 and 10-year compounded annual dividend growth rates (CADGRs) to 2014 of 18.56% and 18.18%, respectively.  Longer term, Grainger has lower, but still very respectable dividend growth rates; Grainger’s CADGR from 1994 to 2014 (20 years) has been 12.58% and from 1989 – 2014 (25 years) of 11.91%.

Since going public in 1967, Grainger has split its stock five times, each time 2-for-1: in November 1970, November 1972, June 1985, June 1991, and June 1998.  The first three stock splits were in the form of a 100% stock dividend.

100 shares purchased at the beginning of 1972 when the company was listed on the NYSE would have cost $4,160 and produced about $51 in dividends.  By the beginning of 2014 – without reinvesting dividends – those shares would be 1,600 shares valued at over $408,000 and expected to produce $6672 in dividends that year.  This results in compounded growth rate of 11.54% in the 42-year period from 1972 to 2014.  More recently, over the 10-year period from the beginning of 2004 to the end of 2013, 100 shares of Grainger stock has grown from $4,739 to $25,323, a compounded annual growth rate of 18.25%.  Of course, reinvesting dividends would have increased the return.

Grainger’s Direct Purchase and Dividend Reinvestment Plans

Grainger does not offer either a direct purchase or a dividend reinvestment plan.  Most brokers offer the option for investors to reinvest dividends automatically.  Fees will vary by broker; investors should contact them directly for more information.

Helpful Links

W. W. Grainger Investor Relations Website

Current quote and financial summary for W. W. Grainger (finviz.com)

Interested in more stocks that have increased dividends for more than a quarter century?  See the full list of Dividend Aristocrats.