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 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).
|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|
|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.