Two US-listed companies, Air Products & Chemicals and Automatic Data Processing, are the only stocks in the world to raise their dividends above the rate of inflation each year for the past four decades, according to an analysis by CNBC Pro. Founded in 1940, Air Products & Chemicals produces industrial chemicals and gases and operates in more than 50 countries. The $60 billion company has raised its dividend per share above the U.S. consumer price index every year for the past 40 years. In 2022, when the price level increased by 8%, Air Products increased its dividend by 8.9%. Similarly, Automatic Data Processing, a payroll and human resources software company, has beaten inflation every year for the past four decades. It increased the shareholder distribution by 9.5% in the last financial year. Out of about 100,000 stocks worldwide, those are the only two that have consistently rewarded their shareholders, according to a CNBC Pro analysis of FactSet data. Over the past year, high inflation has weakened the purchasing power of investors who rely on dividend payments as a source of income. When companies increase their payout rates faster than prices rise, shareholders can maintain investment returns and increase purchasing power over the investment period. Air Products & Chemicals Air Products has benefited from the rise in industrial products in Europe — reporting a 6% annual increase in volumes and an 8% increase in prices for the entire group for the second quarter of this year. In comparison, German industrial giant BASF, an industry-wide proxy, suffered a 13% volume collapse for the second quarter of 2023. However, investors were “skittish” about the stock after the company decided to change the way it capital expenditure calculates to change. , according to investment bank Berenberg. The company plans to exclude construction costs for Neom, the multibillion-dollar green hydrogen electrolyzer project in Saudi Arabia. “The picture for Air Products nevertheless remains one of a well-run core business in a defensive market,” said Sebastian Bray, equity analyst at Berenberg Research, in a note to clients on May 16. APD 1Y line According to FactSet, shares of Air Products, which employs about 21,000 people, are currently trading at a dividend yield of 2.6%, one-fifth above the industry average of 2.1%. The stock currently trades at 22.5 times its price-to-earnings ratio, which is a discount to its European peers Linde, which is at 24.8x, and Air Liquide, which trades at 23.4x. “Given Air Products’ demonstrably higher potential exposure to ammonia raw material pricing going forward, we believe this lower valuation is warranted,” added Bray. However, it should be noted that past performance cannot be used to predict future dividend payments. In addition, Air Products and Automatic Data Processing have increased their payouts to shareholders each year — faster than inflation — but their dividend yields remain smaller compared to companies known for their dividend yield. Automatic Data Processing New Jersey-based Automatic Data Processing has paid a greater dividend per share than Air Products in 24 of the past 40 years. The company also increased its dividend by an average of 13.3% per annum over the past four decades, lower than the average 11% per annum increase that Air Products offers. Shares of companies that pay dividends are also valued for their stability potential during uncertain market conditions, which can lead to increased demand for their shares and higher share prices. Shares of Automatic Data Processing are down 11% this year, but investment bank Stifel believes the stock appears “oversold” at current levels. ADP 1Y mountain “ADP is trading at a 28% premium to the S&P500 (earnings per share) multiple, well below its ~50% historical average, on earnings that appear to be quite risk-weighted,” said Stifel analysts under led by David Grossman in a note to customers on April 26. The stock currently offers a dividend yield of 2.4%, more than two and a half times the industry average.