The Dividend Aristocrats is the name used for a group of stocks for the S&P 500 index components that have grown their dividend payouts for at least 25 consecutive years in a row. The S&P 500 Dividend Aristocrat index was launched by Standard and Poor’s in 2005, it has outperformed the S&P 500 index with less volatility over long term time frames. The S&P 500 Dividend Aristocrats’ track record over the long term shows the compounding effect of dividends being added to capital along with the reward of an increasing dividend for total return on capital on a year over year basis.
The Dividend Aristocrats list includes stocks from all 11 sectors of the S&P 500 index and has both large-cap growth and large-cap value companies among its stock listing. To qualify for the filter and get listed on the S&P 500 Dividend Aristocrat index, a company had to increase their dividend for a minimum of 25 consecutive years in a row. The stock has to be in the S&P 500 index currently with a minimum market cap value of $3 billion. The committee at Standard and Poor’s decides on what stocks are in the S&P 500 index. If a company lowers their dividend pay out or if it is removed from the S&P 500 index, then it is no longer in the Dividend Aristocrats.
The S&P 500 Dividend Aristocrat index usually consists of about 50 large-cap company stocks or more with most rating at least a B-plus or higher on the quality scale. Few technology stocks are on the aristocrats as they tend to focus on reinvesting capital in the business for innovation and growth and not pay outs to dividends.
Interestingly, Warren Buffett’s Berkshire Hathaway is also absent as he does not pay out a dividend believing he can invest the money better by acquiring new businesses and stocks than paying out the dividend to investors. He also considers the tax consequences to the company and the investor when dividends are paid it creates a double taxable event. The dividends paid by a company are from net profits and are not considered business expenses so they are not tax deductible. The company must pay corporate income tax on the profits that are paid out to shareholders as dividends. Then the shareholders have to pay personal income taxes on the dividends they receive. Buffett avoids as many tax events as he can by not selling stocks for as long as he can to avoid creating capital gains taxes and not paying dividends to avoid corporate income tax if he reinvests his company’s profits into new investments.
The Dividend Aristocrat list shows the long term trend of strength not only in earnings and sales but also in consistently creating the cash flow to be able to pay out more and more money through dividends to the company’s share holders year after year for a quarter of a century. These are the safest and most solid companies that investors can trust for long term growth in capital gains and income.
This is a great list for the strongest stocks for a watch list for investing in, covered call writing, and even trading. These stocks have the lowest probability of collapse or bankruptcy with their strong dividend record. They also have built in demand at lower prices from income investors.
Here is a list of the current S&P 500 Dividend Aristocrats as of October 2019:
Ticker Symbol and Dividend Yield:
MMM 3M Co. 3.5%
AOS A. O. Smith 1.9%
ABT Abbott Laboratories 1.6%
ABBV AbbVie, Inc. 5.4%
AFL Aflac, Inc. 2.0%
APD Air Products & Chemicals, Inc. 2.1%
ADM Archer-Daniels-Midland Co. 3.4%
T AT&T, Inc. 5.5%
ADP Automatic Data Processing, Inc. 1.9%
BDX Becton, Dickinson & Co. 1.2%
BF.B Brown-Forman Corp. 1.0%
CAH Cardinal Health, Inc. 3.8%
CAT Caterpillar, Inc. 2.7%
CB Chubb Ltd. 1.9%
CVX Chevron Corp. 3.9%
CINF Cincinnati Financial Corp. 1.9%
CTAS Cintas Corp. 0.76%
CLX The Clorox Co. 2.6%
KO The Coca-Cola Co. 2.9%
CL Colgate-Palmolive Co. 2.5%
ED Consolidated Edison, Inc. 3.1%
DOV Dover Corp. 1.9%
ECL Ecolab, Inc. 0.9%
EMR Emerson Electric Co. 2.8%
XOM Exxon Mobil Corp. 4.8%
FRT Federal Realty Investment Trust 2.9%
BEN Franklin Resources, Inc. 3.6%
GD General Dynamics Corp. 2.3%
GPC Genuine Parts Co. 2.9%
HRL Hormel Foods Corp. 2.0%
ITW Illinois Tool Works, Inc. 2.5%
JNJ Johnson & Johnson 2.9%
KMB Kimberly-Clark Corp. 3.0%
LEG Leggett & Platt, Inc. 3.5%
LIN Linde Plc 1.8%
LOW Lowe’s Cos., Inc. 1.8%
MKC McCormick & Co., Inc. 1.4%
MCD McDonald’s Corp. 2.4%
MDT Medtronic Plc 1.9%
NUE Nucor Corp. 3.0%
PBCT People’s United Financial, Inc. 4.2%
PNR Pentair Plc 1.7%
PEP PepsiCo, Inc. 2.7%
PPG PPG Industries, Inc. 1.6%
PG Procter & Gamble Co. 2.3%
ROP Roper Technologies, Inc. 0.5%
SPGI S&P Global, Inc. 0.9%
SHW The Sherwin-Williams Co. 0.7%
SWK Stanley Black & Decker, Inc. 1.8%
SYY Sysco Corp. 1.9%
TROW T. Rowe Price Group, Inc. 2.6%
TGT Target Corp. 2.3%
UTX United Technologies Corp. 2.0%
VFC VF Corp. 2.2%
GWW W.W. Grainger, Inc. 1.8%
WMT Walmart, Inc. 1.8%
WBA Walgreens Boots Alliance, Inc. 3.2%
To make things easy to invest and diversify for income investors there is an Exchange Traded Fund that tracks all the S&P 500 Dividend Aristocrats, the ticker symbol is $NOBL.
