The Dividend Aristocrats are a select group of currently 57 S&P 500 stocks with 25+ years of consecutive dividend increases.These 57 are large, US companies that have historically provided (slightly) better performance and (slightly) lower volatility than the S&P 500 as a whole.

S&P 500 applies the following criteria to construct the Dividend Aristocrats list:

  • must be members of the S&P 500
  • must have increased dividends every year for at least 25 consecutive years
  • Market Cap at least USD 3 billion
  • Liquidity at least USD 5 million (average daily value traded)
  • Diversification, at least 40 constituents and not sector allocation above 30%

On January 24th, 2018, the following stocks were added to the Dividend Aristocrats Index:

  • Praxair (PX),
  • Roper Technologies (ROP),
  • A.O. Smith Corporation (AOS).

C.R. Bard (BCR) was removed from the Index after it was acquired by fellow Dividend Aristocrat Becton-Dickinson (BDX).

Source: S&P News Release

Please note that Praxair Inc. is to be acquired by Linde.

See also an overview of all changes since 2009

The Dividend Aristocrats Excel spreadsheet contains the following fundamental and stock price performance metric for each stock in the index .

Fundamental metrics:

  • Dividend & earnings per share
  • Dividend Yield
  • Price-to-earnings ratio
  • Pay-out ratio
  • Beta

Stock price performance metric (Members only):

  • 1 yr price target
  • 10 year weighted compound annual growth rate (WCAGR / GEOPAK10)
  • Win factor
  • Loss ratio
  • Total return
Performance of the Dividend Aristocrats List

The S&P Dividend Aristocrats Index has outperformed the S&P 500 over the past decade. According to S&P, Dividend Aristocrats generated an annualized return of 13.70% over the past 10 years, easily beating the market’s 12.40% rate. Over this period, dividends accounted for 31% of the market’s total return.

For the year 2018 the performance is -2.73%. See below the chart as of December 31,2018.dividend aristocrats performance 2018

Dividend aristocrats performance by year 2018

Since the 2000, the dividend aristocrats outperformed the S&P500 in 60% of the cases with an average difference of 8.08%. Taking the under-performance in to account the average out-performance is still 4.2%.

out performance dividend aristocrats 2019

Performance/yield triangle

The last diagram (below) shows the performance per holding period. The performance/yield triangle shows the average annual returns for any investment periods, ie combinations of buy and sell times on an annual basis. The “year of buy” is plotted on the horizontal axis and the “year of sell” on the vertical axis. The average annualized return can be seen at the intersection of these two coordinates.

For example, those who acquired the dividend aristocrats at the end of 2000 and sold them at the end of 2002 achieved an average annual return of -0.08%. With an exit in 2003, however, a per-annum return (cagr) of 7.78% is calculated.

The average data in the bottom indicate which average annual yield was achieved at the start of the respective year. Starting with a position in the aristocrats at the end of 2000, Dividend Aristocrats (buy&hold) investors made e.g. average annual price returns of 8.07%.

performance-triangle-aristocrats-2019

Sector overview of the Dividend Aristocrats

As explained the S&P Dividend Aristocrats Index currently contains 53 stocks with each equally-weighted. As you can see below, the consumer staples sector accounts for 24.3% of the index. This is not surprising given the stability of most consumer staples markets. Real Estate is on the other end of the spectrum at less than 1.8% of the S&P Dividend Aristocrats Index. (date: December 31 2018)dividend aristocrats sector breakdown-2018

Constituent of the Dividend Aristocrats by sector

Energy

  • ExxonMobil
  • Chevron

Consumer Discretionary

  • Genuine Parts Company
  • Lowe’s
  • Target
  • Walgreens Boots Alliance
  • McDonald’s
  • Leggett & Platt
  • Wal-Mart
  • V.F. Corp

Consumer Staples

  • Archer Daniels Midland
  • Brown-Forman
  • Hormel Foods
  • Kimberly-Clark
  • McCormick & Company
  • Sysco
  • Procter & Gamble
  • Colgate-Palmolive
  • Clorox
  • Coca-Cola
  • Pepsico

Industrials

  • 3M Company
  • A.O. Smith
  • Emerson Electric
  • Dover
  • Illinois Tool Works
  • W.W. Grainger
  • Pentair
  • Roper Technologies
  • Stanley Black & Decker
  • Cintas
  • General Dynamics

Financials

  • S&P Global Inc (formerly McGraw Hill Financial)
  • Aflac
  • Franklin Resources
  • T. Rowe Price
  • Cincinnati Financial

Real Estate

  • Federal Realty Investment Trust

Healthcare

  • Becton, Dickinson and Company
  • Cardinal Health
  • Medtronic
  • AbbVie
  • Abbott Laboratories
  • Johnson & Johnson

Basic Materials

  • Air Products
  • PPG
  • Sherwin-Williams
  • Ecolab
  • Nucor
  • Praxair (to be acquired by Linde)

Technology

  • Automatic Data Processing (ADP)
  • AT&T

Utilities

  • Consolidated Edison
Dividend Aristocrats during recession times

We analyzed each Dividend Aristocrat by looking at their earnings, dividends, maximum draw down (MDD) and stock price performance during the 2007-2009 financial crisis. Based on the maximum draw down (MDD) and the stock performance during the 2007-2009 (excluding dividends), we created a ranking of the 8 most recession-proof Dividend Aristocrats.

The Dividend Aristocrats Index by S&P is comprised of companies that have 25 or more consecutive years of dividend increases. They must have business with a strong competitive advantage and fairly stable cash flows to pay investors 25 years of rising dividends.

Next to the earnings and business models, the maximum draw down and stock price performance will also influence the investor or at least be an important factor not to sell during a recession.

Our analysis results in the following top-10 dividend aristocrats with a “minimum” MDD.

Dividend-Aristocrats-recession-mdd-top-10

During the period 2007-2009, the following dividend aristocrats had a very high MDD, the worst 10 are:

Dividend-Aristocrats-recession-mdd-worst-10

Next to the MDD, also the performance is important during the recession. 20 of the dividend aristocrats managed to realize an overall positive return over the 2007-2009.

Read more in our article Recession-Proof Dividend Aristocrats

Other Sources of Dividend Investment Ideas

The Dividend Aristocrats list is not the only way to quickly screen for businesses that regularly pay rising dividends.

  • The Dividend Kings List is even more exclusive than the Dividend Aristocrats.  It is comprised of less than 20 businesses with 50+ years of consecutive dividend increases.
  • The MoneyInvestExpert Defensive Aristocrats is a performance-based top-10 selection of the Dividend Aristocrats to outperform the market on the long-term.
  • Portfolio lists like the Berkshire Hathaway Portfolio or Bill Gates’stock portfolio can be a source.
  • For the European focused investors there is also the list of European Dividend Aristocrats.
  • Dividend Champions are not necessarily members of the S&P 500 index, have increased their dividend for 25 or more consecutive years.
  • 100+ years of dividend, the list of stocks that pay over 100 year of dividend can be an list of inspiration.

Next to selecting the right dividend stocks, important principles for successful long-term investing are Disciple, Diversification, Defensive & indeed Dividend. Read more about this in our free e-book.

Also, our monthly newsletter and premium member data will help you to invest smarter.

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