- The Dividend Aristocrats are a select group of currently 63 S&P 500 stocks with 25+ years of consecutive dividend increases.
- These 63 are large, US companies that have historically provided (slightly) better performance and (slightly) lower volatility than the S&P 500 as a whole.
- By showing the recent performance of the Dividend Aristocrats, some active dividend growth investors may be able to identify relative bargains.
US equities continued their rally in August, the S&P 500 gained another 7% after the +5.6% in July, this is the best monthly performance since April. The Dividend Aristocrats ended this month up 4% after 5.13% in July. The investors were more optimistic after the Fed stimulus and a shift in policy to average inflation targeting, implying lower rates for longer, and some strong earnings, especially from big techs.
Dividend aristocrats underperforming
Year-to-date the US Dividend Aristocrats are still down -1.12% underperforming the S&P 500, given the +9.74% for this benchmark. One of the reasons is the allocation of Tech/IT, which is only 1.4% in the US Dividend Aristocrats index. Which is nothing compared to the +28% IT in the S&P 500 index.
Dividend Aristocrats performance in August 2020
The table below lists all 63 constituents, excluding the recently added spin-offs Carrier Global (CARR) and Otis Worldwide (OTIS), with indicated dividend yield and lists returns over trailing last month, 3-, 6-, and 12-month periods.
Ross Stores (ROST) lost its dividend aristocrat status end of June due to a dividend cut and is also no longer included in this performance data.
Key takeaways from August’s performance:
- Only 12 dividend aristocrats generated a negative return, while 26 generate a return of more than 5% this month
- Becton Dickinson lost almost 14% this month, mainly after missed on revenue and weak full-year guidance on August 6th.
- The best performing sectors are Basic Materials and Consumer Cyclicals.
- Energy and Utilities struggled this month.
Year-to-date the top-3 best performing dividend aristocrats are Clorox (CLX), S&P Global (SPGI), and Lowe’s Companies (LOW). A typical pattern shows up when looking at the year-to-date performance and dividend yield. “High yielders” are year-to-date the laggards while the low dividend yield aristocrats tend to have a positive performance compensating the missed dividend yield.
The above-presented performance data of the Dividend Aristocrats could assist active dividend growth investors to find some bargains for the long run. Interested in the latest data and also dividend growth rates, check our dividend aristocrats dashboard.
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.
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