Key points:
- The UK Dividend Aristocrats Index is created by S&P and is based on a managed dividends policy of increasing or stable dividends for at least 10 consecutive years.
- Only 39 UK stocks are a member of this list.
- In Europe, it is not common to focus on paying a dividend in a row ( consecutive years) to the shareholders.
- By showing the recent performance of the Dividend Aristocrats, some active dividend growth investors may be able to identify relative bargains.
Last month the UK Dividend Aristocrats lost 0.54%, resulting in a year-to-date total return of 10.04%. As a reference, the S&P United Kingdom lost almost -2% in November.
The annualized total return over 10 years is 5.86% for the UK Dividend Aristocrats. The indicated dividend yield is around 5% and the average projected PE is 13.7 for the stocks in this index.
By end of October, Wm Morrison shares have been delisted from the London stock exchange after 54 years as a public company. Hence, Wm Morrison is no longer part of the UK Dividend Aristocrats list.
In June 2021, S&P has announced an update to the Monthly Dividend Review (“MDR”) for the UK and high-yield euro dividend aristocrats.
A relevant change is to focus more on the quality of dividend. The Constituent Selection Rule is now:
“Stocks must have increased or maintained stable dividends for at least 10 consecutive years. Stocks cannot have an indicated yield of more than 10% as of the index rebalancing reference date. In addition, new index constituents must have a maximum 100% dividend payout ratio, and existing index constituents must have a non-negative dividend payout ratio”
New UK Dividend aristocrats added to the index in July are:
- Diploma plc
- BAE Systems plc
- Electocomponents plc
- Rio TInto Group plc
- Dechra Pharmaceuticals plc
- Admiral Group
- Primary Health Properties plc
The table below lists all current 39 constituents, with indicated dividend yield and lists returns over trailing last month, and year-to-date.
The average dividend yield for all the UK dividend aristocrats is around 5.09% at the moment of writing. Here are the 10 highest UK dividend aristocrats yields:
UK Dividend Aristocrat #10: Tate &Lyle
Dividend Yield: 4.8%
Increased or maintained dividend: 14 years
Tate & Lyle PLC provides ingredients and solutions to food, beverage, and other industries. Its products include dairy, beverages, bakery and convenience, sweeteners, and starches. Its segments are Speciality Food Ingredients and Bulk Ingredients.
UK Dividend Aristocrat #9: Admiral Group
Dividend Yield: 4.9%
Increased or maintained dividend: 21 years
UK Dividend Aristocrat #8: GlaxoSmithKline Plc
Dividend Yield: 5.0%
Increased or maintained dividend: 10 years
GlaxoSmithKline PLC creates, discovers, develops, manufactures and markets pharmaceutical products including respiratory and antiviral, vaccines, over-the-counter (OTC) medicines and health-related consumer products.
UK Dividend Aristocrat #7: IG Group Holdings
Dividend Yield: 5.5%
Increased or maintained dividend: 10 years
United Utilities Group PLC is engaged in utility operations. The company, through its subsidiaries, owns and manages a regulated water and wastewater network.
UK Dividend Aristocrat #6: Moneysupermarket.com
Dividend Yield: 5.8%
Increased or maintained dividend: 10 years
UK Dividend Aristocrat #5: Ashmore Group
Dividend Yield: 5.8%
Increased or maintained dividend: 10 years
Ashmore Group PLC is engaged in the provision of investment management services. The Company is a fund manager across investment themes, such as external debt, local currencies, corporate debt, blended debt, alternatives and others.
UK Dividend Aristocrat #4: Legal & General Group Plc
Dividend Yield: 6.2%
Increased or maintained dividend: 12 years
Legal & General Group PLC sells insurance products and other financial services. It transacts life assurance and long-term savings business, investment management, and general insurance and health business.
UK Dividend Aristocrat #3: Jupiter Fund Management Plc
Dividend Yield: 6.8%
Increased or maintained dividend: 10 years
Jupiter Fund Management PLC is a fund manager, engaged in managing equity investments on behalf of retail, institutional and private client investors across products, including the UK and offshore mutual funds, segregated mandates, and investment trusts.
UK Dividend Aristocrat #2: Phoenix Group Holdings Plc
Dividend Yield: 7.6%
Increased or maintained dividend: 10 years
Phoenix Group Holdings is a specialist closed life and pension fund consolidator. It manages closed life funds by protecting and enhancing policyholders’ interests.
UK Dividend Aristocrat #1: British American Tobacco Plc (BAT)
Dividend Yield: 7.8%
Increased or maintained dividend: 24 years
British American Tobacco PLC manufactures and sells cigarettes and other tobacco products under the brands Dunhill, Kent, Lucky Strike, Pall Mall, and Rothmans. It also offers Vapour Products, like e-cigarettes, and Tobacco Heating Products.
Other Sources of Dividend Investment Ideas
There are several lists to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Aristocrats Index is based on 64 companies part of the S&P 500 and with 25+ years of consecutive dividend increases.
- 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 in 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 years of dividend can be a list of inspiration.
- Blue Chips stocks from the US or the European ones.
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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