The importance of checking original dividend data

dividend data history

When researching dividend stocks, one of the first things I look at is the company’s dividend track record. Ideally, I like to see a consistent pattern of dividend growth.

However, occasionally, I’ll be analysing a company’s dividend history, and the data will show that a dividend cut has occurred in the past. Does that automatically rule out the stock as a poor dividend growth stock? No.

Dividend data provided by third party providers can be misleading. Sometimes, it won’t tell the full story. Therefore, it’s important to cross check the information with the dividend data provided by the company.

Get the full story

The problem with a lot of third party data providers, is that they don’t always reflect corporate actions such as share splits or rights issues. The result is that the dividend information can be extremely misleading.

Here’s an example.

Recently, I was looking at the dividend history of Numis (LON: NUM) (NUM.L).

This is the dividend data that Stockopedia provided:

Year Dividend
2016 12.0
2015 11.5
2014 10.5
2013 9.0
2012 8.0
2011 8.0
2010 8.0
2009 8.0
2008 7.5
2007 7.0
2006 5.0
2005 3.2
2004 10.5
2003 7.5

Source: Stockopedia

You can see from the table, that the data suggests that Numis cut its dividend significantly in 2005, and that it took a decade for the dividend to return to 10.5p per share.

However, looking at the data from the Numis website , it turns out that the stock had a 5-for-1 share subdivision in 2005. The table below shows the dividends in 2004 and 2003 restated for the subdivision.

Year Dividend
2016 12.0
2015 11.5
2014 10.5
2013 9.0
2012 8.0
2011 8.0
2010 8.0
2009 8.0
2008 7.5
2007 7.0
2006 5.0
2005 3.2
2004 2.1
2003 1.5

Source: Numis

Stockopedia data had not accounted for that subdivision and its data therefore told a story that was not entirely accurate.

It’s a similar issue with Greene King (LON: GNK) (GNK.L). Some third party data providers’ dividend data suggests that the pub owner cut its dividend in 2006 and in 2009/10. However, an in depth analysis of the company’s dividend history from past annual reports reveals that the company had a 2-for-1 split in 2006 and a rights issue in 2009. The dividend therefore wasn’t cut at all, and has been increased every year since 1997.

The lesson here is that when analysing past dividend data, it’s important to cross check it to the original source. Otherwise, you may not be seeing the whole picture.

Disclosure: Edward Sheldon, CFA owns shares in Greene King. 

This article is provided for general information only and is not intended to be investment advice. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

More from Edward Sheldon, CFA

Why have National Grid shares fallen 23% since May?

This week, I spent some time looking at National Grid (LON: NG)...
Read More

Leave a Reply

Your email address will not be published. Required fields are marked *