Dividend Aristocrats Part 37: Cintas

Cintas’ (CTAS) primary business is creating and servicing corporate uniform plans.

CTAS

The company also sells business products and services, including:

Safety services

first aid products

Restroom supplies

Document management

Fire protection products

Cintas was founded in 1929 as Acme Industrial Laundry Company. Cintas went public in 1983 and now has a market cap of $9.6 billion.

Cintas has a streak of 31 consecutive years of dividend increases. The company’s long dividend streak makes Cintas a member of the exclusive Dividend Aristocrats Index.

CTAS Dividend History

Cintas Business Overview

Cintas’ operations are divided into 3 segments. Each segment is shown below, along with the percentage of total pretax income generated from each segment:

Uniform Rental & Facility Services generates 87% of pretax income

First Aid & Safety Services generates 6% of pretax income

All Other generates 7% of pretax income

Cintas generates the vast majority of its income from its rental uniform business. This business line is the core of what Cintas is.

Competitive Advantage

Cintas competitive advantage comes from its established local delivery routes and network of processing facilities. The company’s employee and location count are shown below:

8,000 delivery routes

364 operating facilities

8 distribution centers

32,000 employees (only 200 union employees)

It would require a large amount of up-front capital to compete effectively with Cintas in business uniform services in North America. Cintas is the largest business of its kind in North America.

The company has a scale based competitive advantage that is very difficult for potential competitors to replicate.

Growth Prospects & Total Return

Cintas has grown earnings-per-share at 6.6% a year over the last decade.

The company has reduced its share count by 4.1% a year over the same time period. About two-thirds of Cintas’ growth has been driven by share repurchases rather than organic growth.