I read a lot of different articles.  Recently I read an article about investing that contrasted “Dividend Investing” and “Growth Investing”.  The article was very interesting but it also made me think about my time as a funeral home owner and how I managed the profits, or cash-flow, of the business.

 

In reading the article one point was expressed that many times public companies pay dividends because paying out that money to investors was done in lieu of searching for growth opportunities for the company.  The article actually said, “Dividends are many times paid out with the cash-flow because the company sees no growth opportunities”.

 

One glance at the cash-flow and large dividends paid by the public tobacco companies brings that thought to reality.

 

So, if you are an individual proprietor of a funeral home you actually have the same choice.  Do you use your cash-flow proceeds and look for a growth opportunity such as buying another funeral home or expanding your existing funeral home or do you simply “take the dividend” and give yourself more cash at the time?

 

We are all different, but over the long-run, it might make a great deal of difference on the situation you find yourself in when you decide you want to retire and sell your funeral business.

 

Let’s say that you have a very stable 150 call funeral home.  Do you continue to take the very stable income out of the business annually and put it into your personal holdings or do you take some risk and expand the present situation hoping you can grow into a 300 or 400 call business?

 

There is no right or wrong answer and part of the answer comes in the question if the money you take out for yourself is put into consumables and enjoyment (buying cars, boats, vacations, etc) or into investments (stocks, land, collectibles, etc).  And, if you choose to “make investments”. . . . . is it better, or more profitable in the long run, to invest in your business or in the public investment markets?

 

It’s an interesting question.  When I was operating my business I don’t think that I really thought about it too much.  However, I’m one who always felt that my long-term “Security” was in the assets of my business.  And, I’m also one who has a strong sense of “Security” and a weaker sense of “Adventure” so I judiciously made investments in the growth of our funeral business simply because that is where my comfort level was.

 

I never made the big splash investment but periodically made what I call incremental investments in the business — remodeling buildings, building new buildings, putting in a crematory, starting a preneed agency, and making an acquisition.  Those investments in our firm, and the growth of my community, eventually led me to operating that 300 to 400 call firm that was highly coveted by regional and national operators.

 

My choices seem to be validated in this recent study from Houlihan and Lokey whereby they make note that private companies have higher revenue and EBITDA growth rates than do companies in the public sector S&P 500.  Here’s what Houlihan and Lokey say, “Private companies in the Private Performing Credit Index (PPCI) reported revenue growth of 12.3% and adjusted EBITDA growth of 14.4% for the quarter ended June 30, 2025, compared to the same quarter in 2024. This marks the eighth consecutive quarter where these companies’ revenue growth exceeded that of the S&P 500 benchmark. This performance highlights the private sector’s consistent ability to achieve robust growth in both revenue and profitability.”

 

When it comes to Margins, the study makes this statement, “. . .public companies exhibited narrower but more consistent margins than their private counterparts within the PPCI. . . . Currently, the average margin for public companies stands at 19.9%, while private companies maintain an average margin of 24.5%. These figures remain consistent with historical averages.”

 

So, everybody is different and everybody has different levels of tolerance, but it seems to appear that one may be able to have a larger sum at retirement by growth of their own private business than by simply investing in the S&P 500.

 

Of course there are a million variables and diversity of investments is usually a smart decision as well.  My take on this subject for funeral home owners is to “know your situation” and seek advice from seasoned professionals when making these investment type decisions.

 

More news from the world of Death Care:

• Luther College research team surveys Iowa cemeteries for possible unmarked burials.  Iowa Capital Dispatch (IA)
• Graveyard Tourism rises as cremation rates shape American’s final journey.  Travel and Tour World
• “I no longer fear dying”:  How a funeral director’s outlook changed with her industry over four decades.  Region Riverina (Australia)

 

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