Long-term shareholders in companies like Commonwealth Bank of Australia (ASX: CBA) and SEEK Limited (ASX: SEK) have done very well with their shares.
Their respective share price performances have been excellent since each company was listed on the ASX — but that's not what I'm on about today.
The CBA was Australia's first big privatisation when shares were first sold to the public at $5.40 each back in 1991, and shares in Seek were first able to be bought and sold in 2005 at $2.10.
For anyone who was fortunate enough to pick up a parcel of shares in each of these floats, I can only hope you bought and didn't sell.
You see, although dividends can be considered 'boring' in some quarters, they can be very exciting to those receiving them, especially if they're being paid from companies that have grown in profitability and size.
The dividends received from both Seek and CBA have been nothing short of stunning over the last 26 and 12 years respectively.
Consider this for the CBA:
- Investors who bought shares in the first CBA float in 1991 earned 40 cents in dividends by the end of the 1991-92 financial year
- The dividends for this financial year are $4.21
- Dividends have grown at an annual compound growth rate (CAGR) of almost 9.5%
- Total dividends paid since the float come to a whopping $55.29 per share, far higher than the original purchase price of $5.40
What about Seek? It's been around for a shorter time, but is still impressive:
- In 2005, its first year of existence on the ASX, it paid shareholders 1 cent per share, and 9 cents per share in 2006
- The dividends paid in 2016-17 are 42 cents per share
- The dividend growth since 2006 is a nice CAGR of 13.7%
- Total dividends paid since listing come to $2.65
In my opinion, dividends are anything but boring.
What about now though?
Three companies that I believe have robust business models and further opportunity to grow their dividends for extended periods include InvoCare Limited (ASX: IVC), Technology One Limited (ASX: TNE), and Challenger Ltd (ASX: CGF).
The proviso is you must think with the mindset that a) you're an owner of businesses, and b) you truly can think with decades in front of you, despite the low up-front yield today.
