How the CSL (ASX:CSL) share price weakness exposes its dividend strength

Anyone who has been watching the S&P/ASX 200 Index (ASX: XJO) over the past year or so (which is most of us, I’d wager) might have noticed the performance fo the CSL Limited (ASX: CSL) share price. Or lack of performance as one might more accurately describe it. Since reaching a new all-time high of over $336 back in February 2020, the CSL share price has fallen around 25%. Today (at the time of writing), CSL shares are sitting at $250.24 a share. That’s a similar level to what you could have bought at back in October 2019.

That’s something of a fall from grace for one of the ASX’s largest companies. Up until February 2020, it seemed as though CSL shares could go nowhere but up. In 2017, the company rose by roughly 40%. In 2018, it was a rough 32%. 2019 saw another ~50% piled on. And between New Year’s Day 2020 and 21 February 2020, another ~18%. That saw CSL ascend to the throw of the ASX 200’s most valuable company for a few months as well. But now Commonwealth Bank of Australia (ASX: CBA) has usurped this title back.

We won’t get into the nitty-gritty of CSL’s fall, although we can probably blame a stretched valuation in a nutshell.

Instead, let’s discuss CSL’s exposure as an ASX dividend growth star.

CSL: An unexpected dividend star

CSL’s stellar history as a dividend growth share has been hidden in plain sight for a while now. The rocking CSL share price has historically kept its dividend yield extremely low by ASX 200 standards. Even now with the 25% fall from all-time highs, CSL shares only yield around 1.05% on current prices.

But the fact is that CSL has been growing its dividend at a healthy rate for years now. Here’s a graph of the annual dividends CSL has paid out to its shareholders since 2013:

CSL Limited Annual Dividends (US$) | Chart by Author

Yes, CSL has grown its dividend from US$1.02 in 2013 to US$2.02 in 2020. It’s also worth mentioning that I excluded the interim dividend of US$1.04 a share that CSL will pay out on 1 April, which is it’s highest ever interim payment and a 9.47% increase on 2020’s corresponding dividend.

The growth in dividends from 2013 to 2020 represents a healthy compounded annual growth rate (CAGR) of 10.25% per annum. Caveating this though has been the rise of the Australian dollar over the past year or so. CSL’s dividends were worth a lot more to Aussie investors when our dollar was buying 65 US cents, as opposed to the exchange rate today of roughly 77 US cents. That’s probably another reason why CSL shares have been selling off over the same period.

Even so, the CSL dividend growth streak is impressive, and rare for an ASX 20 company. Investors will no doubt be hoping it continues for at least another 7 years.

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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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