What is a Dividend Aristocrat?

The Dividend AristocratsThe following post is written by Hank Coleman.

There is a reason why the Dividend Ninja mentions Dividend Aristocrats in his Ninja Lessons investing philosophy. They are tried and true dividend winners who have consistently provided investors with increasing dividends year in and year out.

Dividend Aristocrats make a great addition to a portfolio of dividend stocks. They are a great place to start your search for the next company to add to your portfolio.

What is a Dividend Aristocrat?

The Dividend Aristocrats are defined by Standard &Poor’s S&P 500 Dividend Aristocrats Index.

Being a Dividend Aristocrat is a hard title for a company to earn, and it is even harder to keep. To get into this exclusive club, a company must consistently raise its dividends each year for 25 consecutive years. If the company simply maintains their annual dividend payout or lowers the dividend even in tough times, they are removed from the list. Additionally, it will take another 25 years to earn its place back.

The 2008 to 2009 Financial Crisis saw many bellwether stocks cut or eliminate their dividends altogether. Entire industries and companies that were considered rock solid dividend payers, lost their aristocrat status. Former stalwart stocks such as General Electric (NYSE: GE) saw their membership in the exclusive Dividend Aristocrat club revoked after cutting their dividend.

Benefits of Dividend Aristocrats in Your Portfolio

If dividend-paying stocks are stable companies that reduce your risk, then the Dividend Aristocrats are risk reduction on steroids. Granted, nothing is a guaranteed panacea for risk, and the financial crisis of 2008 showed that even the Dividend Aristocrats could be at risk for macro-level problems. However, if safety is what you are looking for, the Dividend Aristocrats are a great place to start your search. They provide consistent dividend payouts and the potential for share price appreciation.

Characteristics of a Dividend Aristocrat

Dividend Aristocrats have several of fundamental characteristics in common with each other. Most of the stocks that make the list are tried and true multinational blue chip companies. Many have a beta near 1.0 and continue to mirror overall stock market movements. Additionally, Dividend Aristocrats that are part of the S&P 500 index, have a large market capitalization and liquidity for large trading volumes.

Current Dividend Aristocrats in the S&P 500

Here is a list of the current companies that comprise the Standard & Poor’s 500 Dividend Aristocrat Index (as of August 2013).

Symbol Company Symbol Company
ABBV AbbVie Inc HCP HCP Inc
ABT Abbott Laboratories HRL Hormel Foods Corp
ADM Archer-Daniels-Midland Co ITW Illinois Tool Works Inc
ADP Automatic Data Processing JNJ Johnson & Johnson
AFL AFLAC Inc KMB Kimberly-Clark
APD Air Products & Chemicals Inc KO Coca-Cola Co
B BF.B Brown-Forman Corp LEG Leggett & Platt
BCR Bard C.R. Inc LOW Lowe’s Cos Inc
BDX Becton Dickinson & Co MCD McDonald’s Corp
BEN Franklin Resources Inc MDT Medtronic Inc
BMS Bemis Co Inc MHFI McGraw Hill Financial Inc
CAH Cardinal Health Inc MKC McCormick & Co
CB Chubb Corp MMM 3M Co
CL Colgate-Palmolive Co NUE Nucor Corp
CLX Clorox Co PEP PepsiCo Inc
CTAS Cintas Corp PG Procter & Gamble
CVX Chevron Corp PNR Pentair Ltd.
CINF Cincinnati Financial Corp PPG PPG Industries Inc
DOV Dover Corp SHW Sherwin-Williams Co
ECL Ecolab Inc SIAL Sigma-Aldrich Corp
ED Consolidated Edison Inc SWK Stanley Black & Decker
EMR Emerson Electric Co SYY Sysco Corp
FDO Family Dollar Stores Inc T AT&T Inc
GPC Genuine Parts Co XOM Exxon Mobil Corp
GWW Grainger W.W. Inc

Starting with the Dividend Aristocrats, you can narrow down your search. You can focus and invest in the largest tried and true dividend payers, many with global reach.

Do you like investing in the Dividend Aristocrats? Why are they on your list? Or, why do you stay away from them? I’d love to hear your thoughts in the comment section below.


Hank Coleman is a personal finance expert who writes about finance, retirement, and investing on his blog, Money Q&A. Be sure to also follow him on Twitter @MoneyQandA and check out his podcast on,“Your Money: Your Choices”, on iTunes.

11 Responses to “What is a Dividend Aristocrat?”

  1. Financial Independence

    Sep 09. 2013

    Most of these companies are at the point where I would assume they have already undertaken most of the growth they are expected to be able to have – hence distributing earnings in the form of dividends as opposed to reinvesting back into growth.

    I think the aristocrats are great for those seeking financial independence – allowing for a regular income stream without having to sell down you position.

    Reply to this comment
  2. average guy

    Sep 10. 2013

    I am confused. AbbVie (ABBV) has existed for something like a year as a spin off from Abbott Labs.
    >>To get into this exclusive club, a company must consistently raise its dividends each year for 25 consecutive years.

    How can it be considered a DA if the company has existed for such short time? So it look like they are considering Abbott Lab’s history. Kind of weird…

    Reply to this comment
  3. Morg

    Sep 19. 2013

    What are the best ETF’s to play the USA aristocrats and is there a CDN ETF aristocrat. Is it a good time to get into these or wait for a pull back.Thanks

    Reply to this comment
    • Dividend Ninja

      Sep 20. 2013

      Hi Morg,

      I don’t try to time the market, so I invest capital when the funds are available and/or add to current holdings. Every 6 months I look at the market it looks topped out and then continues to go higher. At some point I’m sure there will be a pull-back or market correction. But I’d rather have my money into paying dividends and distributions than sitting on cash which earns nothing. I am more interested in having my portfolio generate income than worrying about the right time to buy – which in reality none of us know. ;)

      Regearding the ETFs sounds like a post I should write!

      Cheers

      Reply to this comment
    • Dividend Ninja

      Sep 29. 2013

      I’m very sorry for the late reply here:

      ETFs for US Aristocrats:
      http://www.dividendninja.com/sdy-a-us-dividend-aristocrat-etf/
      http://www.dividendninja.com/claymores-new-dividend-etf-cud/

      (Keep in mind these are yield weighted ETFs. It’s the High Yield Dividend Aristocrats Index, not the Dividend Aristocrats Index. I cover that point in the CUD article.)

      For the Canadian TSX Aristocrat Index, the ETF is CDZ-T. I’ll write a post on that too! :)

      Cheers

      Reply to this comment
  4. Jesse

    Dec 19. 2013

    I’m curious what would make it better to buy individual dividend aristocrats rather than buying an etf of dividend aristocrats. Or perhaps a mix of both would be nice. Can you give me the reason why someone like yourself would rather pick them than let an etf do it for you? Do you get more out of the dividends if you pick them individually?

    Reply to this comment

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