George Santayana once said “Those that who cannot learn from history are doomed to repeat it.” When it comes to dividends and dividend growth, those who DO learn from history are blessed to repeat it.
You can learn a lot from a company’s dividend history. Before I get into why it’s important, you need to know where to find a company’s dividend history. First, you can use this site, Enter the stock ticker into the search bar at the top of the page and it will take you to a page that includes the past 10 years of dividend payments (and lots of other useful info). You can also use Google finance or dividata.com to find the history.
Reviewing the dividend history for a stock will reveal their stance on rewarding shareholders. A company that increases their dividend payment each year is dedicated to providing value to you for owning shares of their business. The history will reveal stagnant dividend growth or any past dividend cuts. Those kinds of companies are the ones you want to avoid.
It’s important to note that a dividend may appear to be reduced if the company had a stock split and the history has not been adjusted. A stock split is when a company believes the price per share is too high and grants extra shares to all shareholders and reduces the price. For instance, Coca Cola (KO) had a 2:1 price split in 2012 where the price went from around $80 to around $40, and all shareholders ended up with twice as many shares.
Looking at the history of a stock will also give you insight on how long the company has been increasing their dividend. This is how we know where they fall in the Dividend Hierarchy.
If you get used to reviewing the dividend history for a stock, you should be far from doomed.