While researching the iShares Dow Jones Select Dividend Index ETF (NYSE:DVY) I came across a company that practically defines consistency. Genuine Parts Company (NYSE:GPC) has been in business since 1928, and it has has increased revenue every year since its inception with the exception of 1947, 1949 and 2001. In fact, it's been so consistent, it has paid a dividend every year since going public in 1948, and 2008 will be the 52nd consecutive year increasing its dividend. (For more read The Importance Of Dividends and The Power of Dividend Growth.)

Glamorous it Isn't
With 80 years distribution experience, Genuine is in position to meet its customers' needs. The company distributes automotive replacement parts, industrial parts, office products and electrical/electronic materials. Its approximately 32,000 employees operate four divisions: Napa Auto Parts (Automotive), Motion Industries (Industrial), S.P. Richards (Office Products) and EIS (Electrical).

Genuine Parts was originally an automotive parts company. Its diversification process began over 30 years ago; today, Genuine Parts is a $10.8 billion company with operations throughout North America. Napa Auto stores now account for just 49% of revenue, Motion Industries another 31%, SP Richards 16% and EIS the remaining 4%. Times have certainly changed.

Business Is Steady
Sales were up 4% in 2007 to $10.84 billion. Income before taxes was up 6% to $817 million and diluted earnings per share up 8% to $2.98. That was more than enough to pay the $1.46 dividend. While its sales growth in 2007 was below its target of 6%-8%, there were a couple of bright points: Motion Industries sales were up 8% and EIS 7%. Even the automotive division, despite a horrible auto industry, eked out a 2% increase. Only the office products business saw a decline in its numbers, down by 1%. Management believes both the automotive and office products divisions, although struggling, will show improvement in the second half of the year. An 80-year track record says don't bet against the company.

Slow, Consistent Growth
In the past five years, Genuine Parts' sales have grown from $8.5 billion in 2003 to $10.8 billion in 2007, while income before taxes increased $245 million to $817 million in 2007.

Every division has seen gains. The auto parts group sales went from $4.48 billion in 2003 to $5.31 billion in 2007, Motion Industries from $2.25 billion to $3.35 billion in 2007, office products from $1.46 billion to $1.77 billion in 2007 and EIS sales went from $298 million in 2003 to $436 million in 2007. Small gains to be sure. However, slow and steady wins the race.

Its stock has split 10 times in the past 60 years as a public company. One share in 1948 today is worth 205 shares. Its last split was in April 1997. Even more importantly, its dividend in the past 10 years is up 56 cents, or 56%, from $1.00 in 1998 to $1.56 in 2008. I'm impressed, but the market isn't. (Find out more on financial reports in Advanced Financial Statement Analysis.)

Could the Market Be Wrong?
Genuine Parts stock is down about 10% in the past 52-weeks. In the five years up to 2007 fiscal year end, total shareholder return trailed both the S&P 500 and Peer Index. Peer index is made up of various companies which compete with Genuine Parts' segments, and accounts for reinvested dividends. What gives?

Here you have consistency-plus and the market totally disregards the achievement. It doesn't seem to matter that at the end of 2007, debt was $500 million, just 15.5% of total capitalization. In addition, free cash flow was $283 million and that's after repurchasing five million shares, spending $116 million in capital expenditures and returning $243 million in dividends. But this is not enough says Mr. Market.

Even increasing sales in the second quarter by 4% to $2.87 billion and EPS 7% to 81 cents doesn't seem to matter. What about the dividend, it's currently yielding about 3.6%; shouldn't that budge the stock price? Apparently, none of this matters. It seems boring has no place in investing.

Bottom Line
Zacks gives it a 'hold' and a target price of $43. Despite expanding product lines, penetrating new markets and making lots of acquisitions, not to mention diversifying to avoid reliance on one business, the office products and automotive parts are a drag on growth. Until things improve, Zacks won't guide higher.

I tend to disagree. With revenue growth in the 3-5% range for 2008, it compares favorably with both Sara Lee (NYSE:SLE) and Kimberly-Clark (NYSE:KMB), two other consumer goods stocks in the iShares ETF discussed earlier. If you want consistency, Genuine is a good place to start.

Related Articles
  1. Mutual Funds & ETFs

    ETF Analysis: Vanguard Total World Stock

    Learn about the Vanguard Total World Stock exchange-traded fund, which invests in stocks located in numerous countries with a high level of diversification.
  2. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  3. Mutual Funds & ETFs

    ETF Analysis: BioShares Biotechnology Products

    Learn more about the BioShares Biotechnology Products fund, an exchange-traded fund that is focused on producers of FDA-approved drugs.
  4. Mutual Funds & ETFs

    ETF Analysis: SPDR EURO STOXX 50

    Learn about FEZ, the Euro Stoxx 50 ETF. FEZ tracks the 50 largest companies in Europe, making it the Dow Jones Industrial Average of Europe.
  5. Mutual Funds & ETFs

    ETF Analysis: ProShares UltraShort Nasdaq Biotech

    Learn more about an innovative inverse-leveraged sector exchange-traded fund, or ETF, the ProShares UltraShort Nasdaq Biotechnology fund.
  6. Chart Advisor

    Value Stocks Offer Stability in a Volatile Market

    With volatility on the rise, investors are turning to segments of strength such as value stocks. We'll take a look at several ETFs that could be worth a closer look.
  7. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  8. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  9. Mutual Funds & ETFs

    ETF Analysis: Market Vectors EM High Yield Bd

    Learn more about the Market Vectors Emerging Markets High Yield Bond ETF, a fund dedicated to subinvestment grade foreign debt issues.
  10. Mutual Funds & ETFs

    ETF Analysis: First Trust Tactical High Yield

    Find out more about the First Trust Tactical High Yield fund, a debt security-focused ETF designed to produce high income.
  1. Exchange-Traded Fund (ETF)

    A security that tracks an index, a commodity or a basket of assets ...
  2. Exchange-Traded Mutual Funds (ETMF)

    Investopedia explains the definition of exchange-traded mutual ...
  3. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. Lion economies

    A nickname given to Africa's growing economies.
  6. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. What does a high turnover ratio signify for an investment fund?

    If an investment fund has a high turnover ratio, it indicates it replaces most or all of its holdings over a one-year period. ... Read Full Answer >>
  4. Does index trading increase market vulnerability?

    The rise of index trading may increase the overall vulnerability of the stock market due to increased correlations between ... Read Full Answer >>
  5. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  6. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>

You May Also Like

Trading Center

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!