Women-Led Companies, Including Dividend Yielders, Outperform Male-Dominated Peers

Published Tue, 4 Dec 2012 11:00 CET by TopYields.nl


The connection between gender and corporate profitability does not appear to be so obvious, but empirical research shows that higher participation of women in corporate management is good for the company's bottom line. While the share of women chief executives at the helm of the world's 1000 largest companies remains low at 4% and the percentage of women as executive officers hovers around 14.6%, companies managed by women tend to outperform their peers based on several profitability metrics. Moreover, among the most prominent corporations run by women, several pay attractive dividend yields.

Evidence from empirical studies of the positive effect from women's participation in executive decision-making on corporate bottom lines is plentiful. According to a multi-annual study by Pepperdine University of the performance of about 200 of the Fortune 500 companies (the ones providing gender breakdown of their executives), it was concluded that the “correlation between high-level female executives and business success has been consistent and revealing.”

Two studies from Catalyst, a non-profit organization that seeks to expand women's roles in the workplace, and a business consultancy McKinsey & Co., support this assertion. The two studies have found that Fortune 500 companies with more women on their boards/executive committees show better financial performance than those with no or low number of women executives. According to Catalyst, in terms of returns on equity, Fortune 500 companies with 3 or more women on the boards/executive committees outperform those with the least by 53%. In terms of returns on sales and returns on invested capital, Fortune 500 companies with 3 or more women on the boards/executive committees outperform their peers with the least by 42% and 66%, respectively. McKinsey has found similar results in its study, concluding that companies with the highest percentage of women in executive bodies show the best performance.

Now, while the share of women in top executive posts has increased over the past several decades, it remains low by all means. The number of female corporate officers in Fortune 500 companies increased from 11.2% in 1998 to a peak of 16.4% in 2005. It has since dropped to about 15.7%. According to Catalyst, at the observed rate of growth, “it would take 40 years for the number of female corporate officers to match the number of male officers.” On the other hand, the share of women-held board seats has risen progressively from 9.6% in 1995 to 16.1% in 2011. However, in terms of Chief Executive Officers (CEOs), the share of women in top post remains low at 3.8% of the Fortune 500 companies, or 19 in total.

Women Board Directors Align With Strong Performance At Fortune 500 Companies
Among Fortune 500 companies, several female-led corporate giants are dividend-paying corporations with a long history of strong earnings power and consistent dividend growth. In fact, out of 19 Fortune 500 companies led by women, 14 or 74% pay a dividend. The largest Fortune 500 company led by a woman is Hewlett-Packard (NYSE: HPQ). Managed by Meg Whitman as CEO, HPQ, the tenth on the list of the world's largest Fortune 500 companies, currently does not espouse all the aforementioned qualities of the women-led corporate giants. In fact, the stock, which has fallen precipitously by 53% over the past year, is a value trap, although it boasts a high dividend yield of 4.1%.

Several other corporate giants led by women are good examples of business excellence. IBM (NYSE: IBM), as the second-largest company managed by a woman, is a model of outperformance. Over the past five years, the company grew its EPS and dividends at average annual rates of 16.6% and 17.1% per year, respectively. The company currently has a dividend yield of 1.8% on a low dividend payout ratio of only 24%. Its return on equity (ROE) is exceptionally high at 74%. In terms of total returns, investment in this stock five years ago would have returned, to date, 14.6% annually. This is better than for any other stock in the Dow Jones Industrial Average. The cash-rich IBM is likely to continue to boost its dividends in the future. It is one of the preferred stocks of legendary investor Warren Buffett.

PepsiCo (NYSE: PEP), a Dividend Aristocrat boosting dividends for 39 years in a row, is another female-led corporate giant with outstanding performance. With a dividend yield of 3.1%, this company pays out 57% of its earnings in dividends. It has been growing dividends at a rate of 9.3% per year over the past five years. PepsiCo's total ROE is high at 26.2%.

Other dividend payers on the list of women-led corporations include food and biofuel maker Archer Daniels Midland (NYSE: ADM), chemicals manufacturer DuPont (NYSE: DD), the copier company Xerox (NYSE: XRX), Sempra Energy (NYSE: SRA) and legendary soup company Campbell Soup (NYSE: CPB). Of these, DuPont has the highest yield at 4.0%, followed by Sempra Energy's 3.5%, whose dividend rose more than 13% per year over the past five years. Campbell Soup, Archer Daniels Midland and Xerox pay dividend yields of 3.2%, 2.6%, and 2.5%, respectively. Campbell Soup boasts a remarkably high ROE of 66.5%. DuPont's ROE is also high at 26%.

Among the Fortune 500 firms is also a high yielder Frontier Communications (NYSE: FTR). The company has an elevated dividend yield due to poor stock performance amid lackluster financial results in recent periods and a weak balance sheet. In fact, the company slashed its dividend by 47% in the first quarter of 2012. Still, it pays a yield of 8.3% on a payout ratio of 51% of free cash flow. The current payout ratio is sustainable, and has declined to 46% of free cash flow in the previous quarter from 70% in the year-ago quarter. The stock is a viable income play.

Furthermore, as of January 1, 2013, the aerospace and defense sector will be richer by two new women executives taking over the helms of two other Fortune 500 companies: General Dynamics (NYSE: GD) and Lockheed Martin (NYSE: LMT). Both these companies have had remarkable earnings and dividend growth in the past. Despite the fiscal tightening, their earnings outlooks remain solid. General Dynamics, whose dividend increased 12.7% per year over the past five years, currently yields 3.1%. Its competitor Lockheed Martin yields a lush 4.9% dividend, with a 5-year dividend growth averaging 23% per year over the past five years. The new CEO of Lockheed Martin, Marillyn Hewson, faces a challenge of sustaining a skyhigh ROE at 107%.

Based on the documented studies, an increase in the number of female executives in the corporate bodies should lead to the affected companies' better financial performance in the future. Investors who want to reap benefits from the winning leadership of the few women running the world's largest corporation should invest in the dividend-yielders with a proven record of business success.


Stock name Dividend Yield
Frontier Communications 12.73
Xerox 4.15
Hewlett Packard 3.32
Ibm 3.08
Pepsico 2.82
Lockheed Martin 2.76
Archer-daniels-midland 2.70
Campbell Soup 2.21
Du Pont 1.95
General Dynamics 1.62

Articles featuring Frontier Communications (FTR):

Frontier Communications Corporation Declares First-Quarter Dividends

Frontier Communications Corporation (NASDAQ: FTR) announced today that its Board of Directors has declared a regular quarterly cash dividend on Frontier’s 11.125% Mandatory Convertible Preferred Stock, Series A, of $2.78125 per share, payable on March 31, 2017 to holders of record at the close of business on March 15, 2017.... Read more

Frontier Communications: Follow The Money, Dividend Cut Imminent

Frontier Communications (NASDAQ: FTR) is one of the highest-yielding companies with a forward dividend yield of 12.3%. In the past year, the company's stock has trailed the industry and the main market benchmarks as shown below. The company's short interest of 223 million shares is near its all-time high. In this analysis, I will highlight the reasons why dividend investors should not be deceived by the high yield. I will also explain the reasons I believe the company's dividend is... Read more

Frontier Tops S&P 500 Index Dogs By Yield And Broker Backing For January 2018

The Dividend Dogs Rule Stocks earned the "dog" moniker by exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest yielding stocks in any collection became known as "dogs." More precisely, these are, in fact, best called, "underdogs". January/February S&P 500 Dogs S&P 500 Index prices were tallied as of market close January... Read more

Frontier Communications Corporation Declares Fourth-Quarter Dividends

Frontier Communications Corporation (NASDAQ: FTR) announced today that its Board of Directors has declared a regular quarterly cash dividend on Frontier’s 11.125% Mandatory Convertible Preferred Stock, Series A, of $2.78125 per share, payable on December 30, 2016 to holders of record at the close of business on December 15, 2016.... Read more

Frontier Communications Corporation Declares Third-Quarter Dividends

Frontier Communications Corporation (NASDAQ: FTR) announced today that its Board of Directors has declared a regular quarterly dividend on Frontier’s 11.125% Mandatory Convertible Preferred Stock, Series A, of $2.78125 per share, payable in cash on September 30, 2016 to holders of record at the close of business on September 15, 2016.... Read more