Finance

Checking in on the DCI. . . up over 10% year to date

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The last time we checked in on Funeral Director Daily’s proprietary Death Care Index (DCI) was in this article from January 4, 2021.  At that time we noted that the stock index of companies in the death care realm had a total return (capital appreciation plus dividend) of about 6.85% for the calendar year of 2020.  We mentioned that was not as high as the returns of the NASDAQ index or the S&P 500, but it was a solid “grind it out” gain that generally sits pretty good with conservative investors.

That was January and we are now into March with 2020 annual reports from Service Corporation International and Carriage Services behind us. . . .both of which were pretty positive and mentioned record revenue years of 2020.  And, the other two large public companies, StoneMor and Park Lawn Corporation will report their numbers shortly and we have no reason not to believe that they will not mirror SCI and Carriage.

As a matter of fact, here’s what StoneMor said in a recent press release announcing the dates of their conference call, “During the fourth quarter, we experienced double digit year-over-year growth in cemetery sales production, marking a full year of consecutive quarterly cemetery sales production growth versus the prior year, and we see that momentum continuing into the first quarter of 2021. We look forward to sharing more financial information in a few weeks when we release our fourth quarter and full 2020 financial results.”

With that being said, we can report the DCI, as of a Wednesday, March 10, 2021 closing, stood at $353.08 as compared to the number on January 1, 2021, of $318.90.  That is an increase of 10.7% year to date.  As you may know the Funeral Director Daily DCI is the sum total of the price of one share of stock for each of eight companies that operate in death care business — They are Service Corporation International, Carriage Services, StoneMor, Park Lawn Corporation, Security National Financial Corporation, Hillenbrand Industries, Matthews International, and Assurant.

What’s been apparent, if you follow the market, is that tech stocks that benefitted from the social distance rules of the pandemic did real well last year as evident in the NASDAQ’s 43% return for calendar year 2020.  However, now there is a debate about whether they have ran their course and with the advent of a normal society at least appearing on the horizon, will other types of companies fare better going forward?

Consider that year to date for 2021, up until March 10, the Death Care Index has outperformed all three of the major indices. . . . as mentioned, the DCI is up 10.7% while the Dow Jones is up 5.5%, NASDAQ 1.4%, and the S & P 500 3.8%.

I don’t have a crystal ball and I don’t believe that people have suddenly discovered death care stocks.  When I first saw the 10.7% increase and the number higher than the major indices year to date, it reminded me of the expressions such as “Every dog has its day” or as pertaining to stock markets, “It is time in, not timing, that really matters”.

In any regard, we will continue to monitor the business of the death care public companies as the way they conduct their business is many times a lesson that smaller operators can learn from.

Disclaimer—The author of this article holds stock positions in Service Corporation International, Hillenbrand Industries, Park Lawn Corporation, Security National Financial Corporation, and StoneMor.

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