Wednesday, June 2, 2010

First chart - Lowe's equity and dividends

For the past couple of years I have been working on collecting and cleaning the historical fundamental financial data of major public companies. The database that I put together goes back 20 years, and covers data such as  earnings, dividends, assets and liabilities, common and preferred equity, etc - things you need to understand the long-term performance of any kind of a business.

While I am still working on releasing this data and analytics through, I thought I'd share the very first graph I created with my own data. Here is a look at the changes in shareholder equity, and the accumulation of dividends, for one of my favorite companies - Lowe's (LOW).

Lowe's is known as a "dividend aristocrat," due to the consistency of their increasing dividends. Indeed, you can see on the chart that in the past 10 years Lowe's has paid out about $1.50 in dividends per split-adjusted share. What is more impressive is that over the past 10 years the equity per share has increased from about $3 per share to over $13 per share.

An equity increase of 4.3 times in 10 years is equivalent to 15% compound annual increase. Adding in the dividends we get to 17% per year. For a company the size of Lowe's (they are number 42 in Fortune 500), this is a very impressive rate of growth in shareholder wealth.

Of course, equity growth is only one - although arguably the most important one - of the many dimensions of analyzing a company. In the next few months I plan to bring you deeper insights into corporate fundamentals. So, stay tuned!

Disclosure: long on LOW

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