Higher total returns with lower volatility are typical characteristics of the Dividend Aristocrats. The Dividend Aristocrats, have historically shown smaller draw-downs during recessions versus the S&P 500. For example in 2008 the Dividend Aristocrats Index declined 21.9%, compared to the S&P 500 declined by 37%. So outperforming the S&P 500 by 15 percentage points.
Dividend Aristocrats List
S&P 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%
Recession-proof Dividend Aristocrats
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.
During the period 2007-2009, the following dividend aristocrats had a very high MDD, the worst 10 are:
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 2007-2009. Here are the top-10 and worst-10 in a table format:
Top-8 Recession-proof Dividend Aristocrats
Combining the MMD with a maximum of 50% and the performance is resulting in the following top-8 recession proof dividend aristocrats:
- McDonalds (MCD)
- WW Grainger (GWW)
- Colgate-Palmolive (CL)
- Coca-Cola (KO)
- Walmart (WMT)
- Becton Dickinson (BDX)
- Abbot Laboratories (ABT)
- Chevron Corporation (CVX)
It is not a surprise that most of the above companies are active in the consumer or healthcare sector.
Analysis per Dividend Aristocrat
An analysis on each individual Dividend Aristocrat, earning, dividend, mdd, performance can be found by clicking below.
– Abbott Laboratories (ABT)
– Archer-Daniels-Midland Co. (ADM)
– Automatic Data Processing (ADP)
– Aflac Inc. (AFL)
– Air Products and Chemicals (APD)
– Becton-Dickinson & Co. (BDX)
– Franklin Resources (BEN)
– Brown-Forman Corporation (BF.B)
– Cardinal Health Inc. (CAH)
– Cincinnati Financial Corporation (CINF)
– Colgate-Palmolive Co. (CL)
– Clorox Co. (CLX)
– Cintas Corporation (CTAS)
– Chevron Corporation (CVX)
– Dover Corporation (DOV)
– Ecolab Inc. (ECL)
– Consolidated Edison Inc. (ED)
– Emerson Electric Co. (EMR)
– Federal Realty Investment Trust (FRT)
– General Dynamics (GD)
– Genuine Parts Co. (GPC)
– W.W. Grainger Inc. (GWW)
– Hormel Foods Corporation (HRL)
– Illinois Tool Works (ITW)
– Johnson & Johnson (JNJ)
– Kimberly-Clark Corporation (KMB)
– The Coca-Cola Company (KO)
– Leggett & Platt (LEG)
– Lowe’s Company Inc. (LOW)
– McDonald’s Corporation (MCD)
– Medtronic Inc. (MDT)
– McCormick & Company Inc. (MKC)
– 3M Company (MMM)
– Nucor Corporation (NUE)
– PepsiCo Inc. (PEP)
– Procter & Gamble Company (PG)
– Pentair PLC (PNR)
– PPG Industries Inc. (PPG)
– Sherwin-Williams Company (SHW)
– S&P Global (SPGI)
– Stanley Black & Decker Inc. (SWK)
– Sysco Corporation (SYY)
– AT&T Inc. (T)
– Target Corporation (TGT)
– T. Rowe Price Group Inc. (TROW)
– V.F. Corporation (VFC)
– Walgreens Boots Alliance (WBA)
– Wal-Mart Stores Inc. (WMT)
– Exxon Mobil Corporation (XOM)
AbbVie Inc. (ABBV) was spun-off from Abbott Laboratories in early 2015 and therefore not included.
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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