Open main menu

Wikipedia β

S&P 500 Dividend Aristocrats

The Dividend Aristocrats are S&P 500 index constituents that have increased their dividend payouts for 25 consecutive years or more.

The companies that comprise the Dividend Aristocrats span all eleven sectors within the S&P 500 index and therefore encompass both large cap growth and large cap value companies. This composition contrasts sharply with most other dividend-yield based indices, which tend to be more value-oriented in their holdings and are more heavily weighted toward financial, energy, telecommunication and utility stocks.[1]. The increased popularity of "Dividend Growth" investing in recent years has greatly elevated the profile of the S&P 500 Dividend Aristocrat index in the eyes of the investing public. Dividend Growth investing involves investing in companies that are generating robust free cash flow. Free cash flow is defined as a companies' operating cash flow minus capital expenditures. The significance of strong free cash flow is that it then allows a companies' management the flexibility to pay a higher than market dividend growth rate.

Since 1990, the average or mean annual dividend growth rate for the S&P 500 index has been 5.90% through March 31, 2018.

The absolute percentage level of dividends in a dividend growth strategy is less paramount, as there are many attractive dividend growth stocks that yield only a 1% to 2% annual dividend rate. What the investor is seeking in this type of strategy is a higher and accelerating rate of an annual percentage of the dividend increase. Most dividend growth investors seek dividend payouts that increase at a 10% or more rate annually.

The S&P 500 Dividend Aristocrat index has traditionally had a large cap value investor audience that favored blue chip dividend stocks. However, many large cap growth investors also now view the S&P 500 Dividend Aristocrat index very positively as they seek companies that possess a combination of both capital appreciation and a consistent and increasing dividend payout.

The S&P 500 Dividend Aristocrat index was launched by Standard and Poors in May 2005 and has historically outperformed the S&P 500 index with lower volatility over longer investment time frames. For example, over the past 10 years through the period ending March 31, 2018, the S&P 500 Dividend Aristocrat index has returned 12.42% on an average annual basis, compared to the S&P 500 index which has returned only 9.49% annually during that same period. The risk factor commonly called the standard deviation of the S&P 500 during this same 10 year period was 15.05% while the Dividend Aristocrat risk factor or standard deviation was 14.09% or 6.38% lower than the S&P 500.

Standard deviation measures investment risk as a range in percentage terms within a selected probability called in statistical terms a confidence level. The investment return would then fall within a range that is plus or minus around the mean investment return and would be typically within a bell shaped curve. The higher the standard deviation or the wider the plus and minus range of investment returns combined from that mean investment return, the greater the risk of the investment since it has the potential to be farther away from the projected mean return.

As demonstrated over longer time periods, the Dividend Aristocrat index has returned almost 3% more annually than the S&P 500 index with approximately 6% lower standard deviation or risk.

To be eligible for the S&P 500 Dividend Aristocrat index, a stock must have increased their dividend payouts for a minimum of 25 consecutive years or more, must currently be part of the S&P 500 index and finally must have a minimum market capitalization of $3 billion. A committee at S&P Global makes the final decision on which companies are included in the S&P 500 index and this then allows for eligibility for inclusion into the Dividend Aristocrat index. Should a company reduce their dividend or be dropped from the S&P 500 index, the holding is automatically dropped from the Dividend Aristocrat list as well.

Since the 2008 financial crisis, the S&P 500 Dividend Aristocrat list has evolved as follows:

2009 - The list declined from 52 companies in 2008 to 42 companies in 2009, as ten companies cut their dividend payouts due to the 2008 financial crisis. They were: Anheuser Busch (BUD), Bank of America (BAC) , Comerica (CMA), Fifth Third Bank (FITB), Keycorp (KEY), Nucor (NUE), Progressive Corp (PGR), Regions Financial (RF), Synovus Financial (SNV), and Wm. Wrigley (WW), which was bought.

Also in 2009, there were two additions - Bemis (BMS) and Leggett & Platt (LEG).

2010 - A second round of ten companies were dropped: Avery Dennison (AVY), BB&T, Gannett (GCI), General Electric (GE), Johnson Controls (JCI), Legg Mason (LM), M&T Bank (MTB), Pfizer (PFE), State Street Bank (STT), and US Bancorp (USB).

Also in 2010, Brown Forman (BF.B) was added.

2011 - Three companies were added, Ecolab (ECL), Hormel Foods (HRL), and McCormick (MKC).

2012 - CenturyLink (CTL) was removed from the index after reducing its dividend from 72.5 to 54 cents per share per quarter.

In addition in 2012, ten new companies were added to the index as follows:

  1. AT&T (T)
  2. Colgate-Palmolive (CL)
  3. Franklin Resources (BEN)
  4. Genuine Parts (GPC)
  5. HCP (HCP)
  6. Illinois Tool Works (ITW)
  7. Medtronic (MDT)
  8. Nucor (NUE)
  9. Sysco (SYY)
  10. T. Rowe Price (TROW)

2013 - Pitney Bowes (PBI) was removed after slashing the dividend from 37.5c to 18.75c per quarter per share.

2014 - Bemis (BMS) was removed from the S&P 500 index and therefore dropped from the S&P 500 Dividend Aristocrat list.

2015 - Family Dollar Stores (FDO) was removed from the list due to its purchase by Dollar Tree. Also in 2015, Sigma-Aldrich Corp (SIAL) was removed from the list due to its acquisition by Merck.[2]

2016 - Chubb Corp (CB) was removed upon acquisition by ACE Limited (ACE).[3]

2017- General Dynamics (GD) and the REIT Federal Realty Investment Trust (FRT) were added to the list and the REIT HCP, Inc. was removed from the index due to spinning off HCR Manor Care and reducing their dividend.

Also in 2017, CR Bard (BCR) was removed from the list due to its purchase by Becton Dickinson (BDX) on December 29, 2017.

2018- Praxair (PX), A.O. Smith (AOS) and Roper Technologies (ROP) were added to the list. Praxair is to be acquired by Linde.


The full list of 53 S&P 500 Dividend Aristocrat companies as of January 25, 2018 is as follows:

  1. 3M Company (MMM)
  2. AFLAC Inc. (AFL)
  3. AbbVie Inc. (ABBV)
  4. Abbott Laboratories (ABT)
  5. Air Products & Chemicals Inc (APD)
  6. A.O. Smith (AOS)
  7. Archer-Daniels-Midland Co (ADM)
  8. AT&T (T)
  9. Automatic Data Processing (ADP)
  10. Becton Dickinson (BDX)
  11. Brown-Forman (Class B shares BF/B)
  12. Cardinal Health Inc. (CAH)
  13. Chevron Corp. (CVX)
  14. Cincinnati Financial Corp (CINF)
  15. Cintas Corp (CTAS)
  16. The Clorox Company (CLX)
  17. Coca-Cola Co (KO)
  18. Colgate-Palmolive (CL)
  19. Consolidated Edison Inc (ED)
  20. Dover Corp (DOV)
  21. Ecolab Inc (ECL)
  22. Emerson Electric (EMR)
  23. Exxon Mobil Corp (XOM)
  24. Federal Realty Investment Trust (FRT)
  25. Franklin Resources (BEN)
  26. General Dynamics (GD)
  27. Genuine Parts Company (GPC)
  28. W. W. Grainger (GWW)
  29. Hormel Foods Corp (HRL)
  30. Illinois Tool Works (ITW)
  31. Johnson & Johnson (JNJ)
  32. Kimberly-Clark (KMB)
  33. Leggett & Platt (LEG)
  34. Lowe's Companies, Inc. (LOW)
  35. McCormick & Company (MKC)
  36. McDonald's (MCD)
  37. Medtronic (MDT)
  38. Nucor (NUE)
  39. PPG Industries (PPG)
  40. PepsiCo (PEP)
  41. Pentair (PNR)
  42. Praxair (PX)
  43. Procter & Gamble (PG)
  44. Roper Technologies (ROP)
  45. S&P Global (formerly McGraw Hill Financial, Inc. SPGI)
  46. Sherwin-Williams (SHW)
  47. Stanley Black & Decker Inc. (SWK)
  48. Sysco (SYY)
  49. T. Rowe Price (TROW)
  50. Target Corporation (TGT)
  51. VF Corporation (VFC)
  52. Walmart (WMT)
  53. Walgreen Boots Alliance (WBA)

See also [4][5]

InvestingEdit

The ProShares S&P 500® Dividend Aristocrats ETF (NOBL) has tracked the S&P 500 Dividend Aristocrats Index since 2013, and is the only ETF that tracks this index.

Other popular ETFs that mimic the S&P 500 Dividend Aristocrat index but do not replicate it exactly include the exchange-traded fund SPDR S&P Dividend (SDY) which tracks the S&P High Yield Dividend Aristocrats Index. The S&P High Yield Dividend Aristocrat Index is a different index than the S&P 500 Dividend Aristocrat Index. The High Yield version tracks the S&P Composite 1500 index, which contains three times as many stocks than the S&P 500 index. Another difference is that the High Yield version contains stocks that have increased their dividends for at least 20 consecutive years while the more popular and widely held Dividend Aristocrat Index has stocks that have increased their dividends for at least 25 consecutive years.

One other well-known ETF that mimics but does not exactly track the S&P 500 Dividend Aristocrat Index is the iShares Select Dividend (DVY). This ETF tracks the Dow Jones U.S. Select Dividend Index. [6]

ReferencesEdit

External linksEdit

  • 2018 Dividend Aristocrats List Current list of all Dividend Aristocrats including statistics on each of the stocks that include dividend yield, valuation, debt metrics, and averages. Each stock is a U.S. S&P 500 stock that has increased its dividend for at least 25 consecutive years. This is the complete list of Dividend Aristocrat stocks.
  • US Dividend Champions List An excel spreadsheet prepared by David Fish. The list provides an abundance of stock information for companies that have increased their dividend for consecutive years in a row. The list is broken into three categories separated by the dividend streak length: Dividend Champions (>24 years), Contenders (10 to 24 years) and Challengers (5 to 9 years).
  • Canadian Dividend All-Star List The Canadian Dividend All-Star List is a list of Canadian companies that have increased their dividend for five or more calendar years in a row. The excel spreadsheet which can be downloaded for free provides a variety of stock and dividend information. Beyond regular stock information like the price, dividend yield, or P/E the list provides more than 10 years worth of dividend payments for each company and the lowest price each year for the past decade.
  • Dividend Aristocrats 2015