Checking up on the DCI — down about 34% year to date

April 6, 2020/Finance/

It’s been a while since Funeral Director Daily has updated its proprietary Death Care Index or DCI. While not a scientific weighting of public company death care stocks it does give some semblance to what the investment community is thinking about the funeral, cemetery, crematory, and preneed services business community and the direction that they are heading.

The DCI is comprised of eight public companies and its value is derived at by looking at what the total aggregate value of one share of stock in each company added together would equal on a certain date. As we have seen lately, due to the economic situation of the COVID-19 pandemic, many of us know that our investment portfolios are losing value so I thought it would be a good time to compare where the DCI stood in relation to those numbers.

The eight public companies that comprise the DCI are: Service Corporation International (funeral homes/cemeteries), StoneMor (funeral homes/cemeteries), Carriage Services (funeral homes/cemeteries), Park Lawn Corporation (funeral home/cemeteries), Hillenbrand Industries (Batesville Casket Company among its businesses), Assurant (Assurant Preneed among its businesses), Matthews International (memorialization products for the cemetery, funeral home, and cremation industries among its businesses), and Security National Financial Corporation (preneed, financial, funeral homes and cemeteries among its businesses).

The aggregate value of one share of each of those stocks as of the Friday, April 3, close of the markets would be $200.49. That compares to a value of the DCI on January 1, 2020, of $303.73. . . which indicates a loss in value for the DCI of about 34% in that time period (only a couple of days off of a true Q1 2020 value). To make a comparison (from January 1 to April 3) of that with other indices of the public markets in the United States would be as such:

Dow Jones Industrial Average: Down 28%
NASDAQ: Down 18%
S+P 500: Down 23%

Related — Service Corporation International and business guidance. On Friday, April 3, according to E-Trade, Service Corporation International issued the following statement: “Given the increased uncertainty related to the impact of the COVID-19 pandemic on the company’s financial results, the company is withdrawing its financial outlook for the entire fiscal year ending December 31, 2020, which was previously issued on February 17, 2020.”

Funeral Director Daily take: An interesting note about the DCI at this date is that seven of the eight companies traditionally pay out some sort of dividend to shareholders. StonMor is the only company that does not presently pay a dividend to shareholders. Six pay a cash dividend and Security National Financial Corporation (SNFC) has a history of paying a 5% stock dividend at the end of each year.

The cash dividend at this time is $5.59 annually which would equate to a 2.7% annual yield (plus the possible SNFC dividend) at today’s prices. From our point of view, it appears that most of these companies have a history of stable to growing dividends over the last five years and the vast majority appear to have the cash-flow to continue to do so.

So, if there is a silver lining in the depressed price of the DCI at this time, it appears that that silver lining is that – when you include a possible stock dividend from SNFC – you have the ability to receive an almost 3% yield from what appears to be historically going concerns.

Disclaimer–The opinions expressed are those of Funeral Director Daily. The management of Funeral Director Daily has stock positions in Service Corporation International, Park Lawn Corporation, Hillenbrand Industries, and Security National Financial Corporation.

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