- The Dividend Aristocrats are a select group of currently 65 S&P 500 stocks with 25+ years of consecutive dividend increases.
- These 65 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.
- In May, the Dividend Aristocrats gained +2.54%, outperforming the +0.70% return of the broad market(S&P 500).
- Year-to-date the Dividend Aristocrats are outperforming the S&P 500, 16.16% versus 12.62%.
The U.S. equities posted modest gains in May with the S&P 500 up 0.70%, after adding 5.3% in April. The investor’s sentiment was driven by concerns about inflation related to the economy opening up after COVID-19, hurting growth stocks while value stocks led the gains.
Hence the outperformance of the Dividend Aristocrats. This index is mainly based on value stocks and gained +2.54% this month. Year-to-date, the Dividend Aristocrats are up 16.16%, while the S&P 500 is up 12.62%.
The charts below display the year-to-date total return of the Dividend Aristocrats ETF (NOBL), Dow Jones, and S&P 500 (SPX) index.
The table below lists all 65 constituents, including the three new dividend aristocrats IBM (IBM), NextEra Energy (NEE) & West Pharmaceutical Services (WST), with indicated dividend yield and lists returns over trailing last month, 3-, 6-, and 12-month periods.
Key takeaways for May:
- 43 dividend aristocrats generated a positive return, while only 4 aristocrats lost more than 5% this month. See chart below.
- Nucor Corporation (NUE) is the top performer with 24.7% this month. The largest North American steelmaker reported very strong quarterly earnings and is benefitting from strong demand and rising prices for steel. The stock is up 94% year-to-date.
- AT&T (T) is still leading the top-10 high yielders with a dividend yield of 6.89%. However, its stock price dropped more than 6% based on the announcement that its sale of WarnerMedia to Discovery would mean a dividend cut. S&P Dow Jones Indices indicated that AT&T’s Dividend Aristocrats status will be reviewed.
- Retail V.F. Corporation (VFC) reported Q4 adjusted earnings (May 21) which were not that good and below Wall Street’s estimates. Its shares plunged 9% on this news, making it the worst performer of this month.
The average dividend yield is 2.32% for all dividend aristocrats, below the top-10 highest-yielding aristocrats.
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.
Members can use the Dividend Aristocrats screener.
Due to the switch to value stocks, the dividend aristocrats are back on track to outperform the S&P 500 again. Year-to-date the Dividend aristocrats outperformed the S&P 500 with ~3.50%. The Dividend aristocrats returned 16.16%, while the S&P 500 returned “only” 12.62%. The 10 years annualized total return of the Dividend Aristocrats (14.53%) is now just above the S&P 500(14.38%).
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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