2020 Dividend Aristocrats List | See All 65 Now Sure Dividend

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The 2020 Dividend Aristocrats List | See All 65 Now


Updated on November 2nd, 2020 by Bob Ciura
Spreadsheet data updated daily

The Dividend Aristocrats are a select group of 65 S&P 500 stocks with 25+ years of consecutive dividend increases.

They are the ‘best of the best’ dividend growth stocks. The Dividend Aristocrats have a long history of outperforming the market.

The requirements to be a Dividend Aristocrat are:

There are currently 65 Dividend Aristocrats. You can download an Excel spreadsheet of all 65 (with metrics that matter such as dividend yields and price-to-earnings ratios) by clicking the link below:

 

Note 1: On January 24th, 2020, Amcor (AMCR), Atmos Energy (ATO), Realty Income (O), Essex Property Trust (ESS), Ross Stores (ROST), Albemarle (ALB), and Expeditors International (EXPD) were added to the Dividend Aristocrats Index which brings the total number of Dividend Aristocrats up from 57 to 64.

Note 2: On March 31st, 2020, United Technologies merged with Raytheon to form Raytheon Technologies, changed its ticker to RTX, and spun off Carrier Global (CARR) and Otis Worldwide (OTIS) to bring the total Dividend Aristocrat count up to 66.

Note 3: Ross Stores (ROST), which was added to the Dividend Aristocrats list in January of 2020 announced it is suspending its dividend on May 21st, 2020. The company was officially removed from The Dividend Aristocrats prior to the market open on July 1st, bringing the total count down to 65.

2020 Dividend Aristocrats Changes

ROST Removal

Source: S&P News Releases

You can see detailed analysis on all 65 further below in this article, in our Dividend Aristocrats In Focus series. Analysis includes valuation, growth, and competitive advantage(s).

Table of Contents

You can also watch the following video for more information on the Dividend Aristocrats and see a table of the Dividend Aristocrats below.

How to Use The Dividend Aristocrats List To Find Dividend Investment Ideas

The downloadable Dividend Aristocrats Excel Spreadsheet List above contains the following for each stock in the index:

All Dividend Aristocrats are high quality businesses based on their long dividend histories. A company cannot pay rising dividends for 25+ years without having a strong and durable competitive advantage.

But not all Dividend Aristocrats make equally good investments today. That’s where the spreadsheet in this article comes into play. You can use the Dividend Aristocrats spreadsheet to quickly find quality dividend investment ideas.

The list of all 65 Dividend Aristocrats is valuable because it gives you a concise list of all S&P 500 stocks with 25+ consecutive years of dividend increases (that also meet certain minimum size and liquidity requirements).

These are businesses that have both the desire and ability to pay shareholders rising dividends year-after-year. This is a rare combination.

Together, these two criteria are powerful – but they are not enough. Value must be considered as well.

The spreadsheet above allows you to sort by forward price-to-earnings ratio so you can quickly find undervalued, high quality dividend stocks.

Here’s how to use the Dividend Aristocrats list to quickly find high quality dividend growth stocks potentially trading at a discount:

  1. Download the list
  2. Sort by ‘Forward PE Ratio’, smallest to largest
  3. Research the top stocks further

Here’s how to do this quickly in the spreadsheet

Step 1: Download the list, and open it.

Step 2: Apply a filter function to each column in the spreadsheet.

Step 3: Click on the small gray down arrow next to ‘Forward P/E Ratio’, and then click on ‘Descending’.

Step 4: Review the highest ranked Dividend Aristocrats before investing. You can see detailed analysis on every Dividend Aristocrat further below in this article.

That’s it; you can follow the same procedure to sort by any other metric in the spreadsheet.

This article examines the characteristics and performance of the Dividend Aristocrats in detail. A table of contents for easy navigation is below.

Performance Through October 2020

In October 2020, the Dividend Aristocrats, as measured by the Dividend Aristocrats ETF (NOBL), registered a decline of 1.9%. It outperformed the SPDR S&P 500 ETF (SPY) for the month.

Short-term performance is mostly noise. Performance should be measured over a minimum of 3 years, and preferably longer periods of time.

The Dividend Aristocrats Index has slightly underperformed the broader market index over the last decade, with a 12.8% total annual return versus a 13.0% total annual return for the S&P 500 Index. But, the Dividend Aristocrats have exhibited slightly lower volatility than the broader market.

Source: S&P Fact Sheet

Higher total returns with lower volatility is the ‘holy grail’ of investing. It is worth exploring the characteristics of the Dividend Aristocrats in detail to determine why they have performed so well.

Note that a good portion of the outperformance relative to the S&P 500 comes during recessions (2000 – 2002, 2008). Dividend Aristocrats have historically seen smaller drawdowns during recessions versus the S&P 500. This makes holding through recessions that much easier. Case-in-point: In 2008 the Dividend Aristocrats Index declined 22%. That same year, the S&P 500 declined 38%.

Great businesses with strong competitive advantages tend to be able to generate stronger cash flows during recessions. This allows them to gain market share while weaker businesses fight to stay alive.

Related: The video below shows the Great Recession performance of every Dividend Aristocrat (excluding the new Aristocrats for 2019 and 2020).

 

The Dividend Aristocrats Index has beaten the market over the last decade (and over the last 28 years)…

I believe dividend paying stocks outperform non-dividend paying stocks for three reasons:

  1. A company that pays dividends is likely to be generating earnings or cash flows so that it can pay dividends to shareholders. This excludes ‘pre-earnings’ start-ups and failing businesses. In short, it excludes the riskiest stocks.
  2. A business that pays consistent dividends must be more selective with the growth projects it takes on because a portion of its cash flows are being paid out as dividends. Scrutinizing over capital allocation decisions likely adds to shareholder value.
  3. Stocks that pay dividends are willing to reward shareholders with cash payments. This is a sign that management is shareholder-friendly.

In our view, Dividend Aristocrats have historically outperformed the market and other dividend paying stocks because they are, on average, higher-quality businesses.

A high-quality business should outperform a mediocre business over a long period of time, all other things being equal.

For a business to increase its dividends for 25+ consecutive years, it must have or at least had in the very recent past a strong competitive advantage.

Sector Overview

A sector breakdown of the Dividend Aristocrats index is shown below:

The top 2 sectors by weight in the Dividend Aristocrats are Industrials and Consumer Staples. The Dividend Aristocrats Index is tilted toward Consumer Staples and Industrials relative to the S&P 500. These 2 sectors make up over 45% of the Dividend Aristocrats Index, but less than 20% of the S&P 500.

The Dividend Aristocrats Index is also significantly underweight the Information Technology sector, with a 1.5% allocation compared with over 20% allocation within the S&P 500.

The Dividend Aristocrat Index is filled with stable ‘old economy’ blue chip consumer products businesses and manufacturers; the 3M’s (MMM), Coca-Cola’s (KO), and Johnson & Johnson’s (JNJ) of the investing world. These ‘boring’ businesses aren’t likely to generate 20%+ earnings-per-share growth, but they also are very unlikely to see large earnings drawdowns as well.

The 7 Best Dividend Aristocrats Today

The following section ranks our top 7 Dividend Aristocrats to buy today, based on expected annual returns through 2025. These 7 stocks represent attractive long-term buys for dividend growth investors.


Dividend Aristocrat #7: People’s United Financial (PBCT)

People’s United Financial is a diversified financial services company that provides commercial and retail banking and wealth management services via its network of over 400 branches in the Northeast. It has total assets of $59 billion and trades with a market capitalization of approximately $4.6 billion.

The company has more than doubled its total assets during the last decade thanks to organic growth, geographic expansion, and a series of acquisitions. In the last six years, it has grown its loans and its deposits at a 9% average annual rate. In 2019, People’s United Financial acquired United Financial, which enhanced the presence of the company in central Connecticut and western Massachusetts.

Source: Investor Presentation

Just like all the other banks, People’s United Financial is now facing a strong headwind, namely the outbreak of the coronavirus. As a result, virtually all banks will increase their provisions for loan losses. In the 2020 third quarter, pre-provision net revenue of $198.9 million increased 4% from the previous quarter, and 15% from the same quarter a year ago. The company’s efficiency ratio of 53.8% rose 300 basis points year-over-year. Provision for credit losses totaled $27.1 million for the quarter, a decrease of $53.7 million from the previous quarter.

People’s United Financial has grown its earnings-per-share for 9 consecutive years. In the last five years, the company has grown its earnings-per-share at a 10.6% average annual rate. However, this period includes a steep decrease in the tax rate, from 28% to 19%. While the pandemic will take its toll on the earnings this year, and it is likely the company’s earnings-per-share growth streak will end, we still expect 4% earnings-per-share growth over the next five years, primarily thanks to the recent acquisitions.

People’s United Financial has raised its dividend for 27 consecutive years, albeit with small increases for the past several years. Due to the dip in the earnings expected this year, the payout ratio has risen to nearly 70%. Given the economic damage caused by the coronavirus, investors should note that People’s United Financial is vulnerable to recessions. In the Great Recession, its earnings-per-share plunged -54%, from $0.52 in 2007 to $0.24 in 2010. That said, the dividend appears safe, with a high yield above 6%.

The combination of an expanding price-to-earnings multiple, future EPS growth, and dividends leads to total expected returns of 13.2% per year over the next five years.


Dividend Aristocrat #6: Franklin Resources (BEN)

Franklin Resources, founded in 1947 and headquartered in San Mateo, CA, is a global asset manager with a long and successful history. The company offers investment management (which makes up the bulk of fees the company collects) and related services to its customers, including sales, distribution, and shareholder servicing. As of September 30th, 2020, assets under management (AUM) totaled $1.42 trillion for the company.

On February 18th, 2020 Franklin Resources announced that it had entered into a definitive agreement to acquire Legg Mason (LM) for $4.5 billion in cash, to go along with the assumption of $2 billion in debt. When announced,the deal would create a combined $1.5 trillion asset manager.

On October 27th, 2020 Franklin Resources reported Q4 and full year fiscal 2020 results for the period ending September 30th, 2020. Total assets under management equaled $1.419 trillion, a 105% increase from last quarter, driven by a $797.4 billion gain from the Legg Mason acquisition, a positive $22.4 billion change net market value and -$23.7 billion of net outflows. Negative net flows are an item Franklin Resources has faced for several quarters in a row.

For the quarter, operating revenue totaled $1.705 billion. This figure represented 0.14% of average AUM or ~56 basis points on an annualized basis. On an adjusted basis net income equaled $291 million or $0.56 per share versus $358.4 million or $0.71 per share. For the year, Franklin Resources generated operating revenue of $5.57 billion compared to $5.67 billion in fiscal year 2019. This figure represented 0.67% of average AUM for the year. Adjusted net income totaled $1.311 billion or $2.61 per share versus $1.331 billion or $2.62 per share prior.

The combination of an expanding price-to-earnings multiple, 4% expected annual EPS growth, and the 5.5% dividend yield leads to total expected returns of 13.7% per year over the next five years.


Dividend Aristocrat #5: AT&T Inc. (T)

AT&T is the largest communications company in the world, operating in three distinct business units: AT&T Communications (providing mobile, broadband and video to 100 million U.S. consumers and 3 million businesses); WarnerMedia (including Turner, HBO, Warner Bros. and the Xandr advertising platform); and AT&T Latin America (offering pay-TV and wireless service to 11 countries).

In the 2020 third quarter, AT&T generated revenue of $42.3 billion, along with operating cash flow of $12.1 billion. Among the highlights, AT&T recorded more than 5 million total domestic wireless net adds along with over 1 million postpaid net additions. The company’s postpaid churn was an impressive 0.69% for the quarter.

AT&T still expects free cash flow of at least $26 billion for the full year. This will help the company continue to invest in growth, pay dividends to shareholders, and also pay down debt. AT&T’s net debt-to-EBITDA ratio was ~2.66x at the end of the quarter.

Source: Investor Presentation

AT&T is a colossal business, easily generating profits of $20+ billion annually, but it is not a fast grower. From 2007 through 2019 AT&T grew earnings-per-share by 2.2% per year. While the company is picking up growth opportunities, notably in its recent acquisition of Time Warner, we recognize the premiums paid and the fact that the company’s legacy businesses are steady or declining. AT&T is optimistic about generating reasonable growth and the payout ratio had been falling, resulting in excess funds to divert toward paying down debt.

Two individual growth catalysts for AT&T are 5G rollout and its recently-launched HBO Max service. AT&T continues to expand 5G to more cities around the country. On June 29th, AT&T announced it had turned on 5G service to 28 additional markets. AT&T now provides access to 5G to parts of 355 U.S. markets, covering more than 120 million people.

On May 27th, AT&T launched streaming platform HBO Max and generated 90,000 mobile downloads on its first day. HBO Max is priced at $15 per month and offers subscribers approximately 10,000 hours of programming. The new platform is a critical step for AT&T to keep up in the streaming wars.

Shares of AT&T trade for a 2020 price-to-earnings ratio of 8.4, below our fair value P/E of 12. The stock also has an attractive dividend yield of 7.6%. Combined with 3% expected annual earnings-per-share growth, we expect total annual returns of 14.0% per year over the next five years.


Dividend Aristocrat #4: Federal Realty Investment Trust (FRT)

Federal Realty is a Real Estate Investment Trust, or REIT. It concentrates in high-income, densely-populated coastal markets in the US, allowing it to charge more per square foot than its competition. Federal Realty trades with a market capitalization of $5.6 billion.

Federal Realty’s business model is to own real estate properties that it rents to various tenants in the retail industry. This is a difficult time for retailers, as competition is heating up from e-commerce players such as Amazon (AMZN) and many others. Mall traffic is declining, which has put pressure on many brick-and-mortar retailers. Conditions for retail real estate have become even more challenging due to the coronavirus, which has forced many stores to close.

That said, Federal Realty continues to generate positive FFO and pay dividends to shareholders, thanks to a high-quality and diversified property portfolio.

Source: Investor Presentation

Federal Realty’s competitive advantages include its superior development pipeline, its focus on high-income, high-density areas and its decades of experience in running a world-class REIT. These qualities allow it to perform admirably, and continue growing even in a recession.

The company reported weak second-quarter results, not surprisingly because of the coronavirus pandemic. FFO declined 52% from the same quarter a year ago. The portfolio was 93% leased as of June 30th. However, investors are hoping the bottom is in.

Approximately 94% of Federal Realty’s commercial tenants were open and operating as of October 1st. The company collected 83% of third-quarter billed recurring rents. Federal Realty also increased its dividend for the 53rd year in a row.

In response to the coronavirus-related shutdowns, the company is boosting its liquidity to help it get through the coronavirus crisis. Federal Realty completed a $400 million term loan issue on May 6th, and a separate $400 million note issuance on May 9th. The company has approximately $2 billion in available liquidity consisting of cash on hand and its undrawn credit facility.

Based on expected 2020 FFO-per-share of $5.73, Federal Realty stock trades for a price-to-FFO ratio of 12.5. Our fair value estimate for Federal Realty is a price-to-FFO ratio (P/FFO) of 15. We view Federal Realty stock as undervalued. In addition, expected annual FFO-per-share growth of ~7%, plus the 6% dividend yield lead to expected total annual returns of 15.5% per year over the next five years.


Dividend Aristocrat #3: Walgreens Boots Alliance (WBA)

Walgreens Boots Alliance is a pharmacy retailer with over 18,000 stores in 11 countries. The stock currently has a $31 billion market capitalization. Walgreens has increased its dividend for 45 consecutive years.

On October 15th, 2020 Walgreens reported Q4 and full-year 2020 results for the period ending August 31st, 2020. For the quarter, sales increased 2.3% to $34.7 billion. Adjusted operating income decreased -27.7% to $1.1 billion. On a per share basis, adjusted EPS decreased -28.2% to $1.02, reflecting an estimated adverse impact of -$0.46 from the COVID-19 pandemic.

For the fiscal year, sales increased 2.0% to $139.5 billion. Adjusted operating income decreased -24.9% to $5.2 billion, while adjusted earnings-per-share totaled $4.74, down -20.6% year-over-year but ahead of previous guidance of $4.65 to $4.70. This included an estimated -$1.06 adverse impact from the COVID-19 pandemic. In addition, Walgreens introduced fiscal 2021 guidance, anticipating low single-digit growth in adjusted EPS%.

Walgreens has a positive long-term growth outlook. Retail pharmacy has proven to be resistant to e-commerce and will benefit from the aging U.S. population and rising demand for healthcare. For example, in the most recent quarter Walgreens’ sales growth was led by a 3.6% increase in the Retail Pharmacy USA segment and a 4.3% increase in the Pharmaceutical Wholesale division.

Source: Investor Presentation

Pharmacy sales, which accounted for 75% of the Pharmacy USA segment’s sales in the quarter, increased 4.2% compared with the year-ago quarter. Separately, Walgreens announced more than 2,300 products will be available for delivery in Chicago, Atlanta, and Denver through DoorDash.

Walgreens has also announced a partnership with VillageMD in which Walgreens will offer full-service doctor offices co-located at its stores. Over the next five years, the partnership will result in 500 to 700 primary-care clinics in over 30 U.S. markets.

Walgreens’ competitive advantage is its leading market share. Its robust retail presence and convenient locations encourage consumers to use Walgreens instead of its competitors. This brand strength means customers keep coming back to Walgreens, providing the company with stable sales and growth.

Consumers are unlikely to cut spending on prescriptions and other healthcare products even during difficult economic times which makes Walgreens very resistant to recessions. Walgreens’ adjusted earnings-per-share declined by just 7% during 2009 and the company actually grew its adjusted earnings-per-share from 2007 through 2010.

Based on expected fiscal 2021 adjusted EPS of $4.98, Walgreens stock trades at a price-to-earnings ratio (P/E) of 7.2. Our fair value estimate is a P/E ratio of 10.0, which means the stock valuation has significant room for expansion. We expect this expansion to combine with 5% expected annualized EPS growth and the 5.2% dividend yield to generate 16.2% annualized total returns over the next five years.


Dividend Aristocrat #2: Chevron Corporation (CVX)

Chevron is the third-largest oil major in the world based on its market cap of $134 billion, behind only Shell (RDS-A) and Exxon Mobil. In both 2018 and 2019, Chevron generated 78% of its earnings from its upstream segment.

In late October, Chevron reported (10/30/20) financial results for the third quarter of fiscal 2020. Due to the impact of the pandemic on the global demand for oil, net oil-equivalent production fell -7% over last year’s quarter. Falling production combined with weak commodity prices caused a result of $201 million for the quarter, compared with adjusted earnings of $2.9 billion in the year-ago quarter.

Source: Investor Presentation

However, the rest of the year will be much worse for Chevron due to outbreak of the coronavirus, which has caused a collapse in the demand for refined products and has sent the oil price to 18-year lows. We expect the oil major to lose -$0.70 per share this year. In response to the pandemic, Chevron will reduce its capital expenses by $2 billion and its operating costs by $1 billion.

Chevron grew its output by 4% in 2019 and expected to grow its output by 3%-4% per year until 2024 but the pandemic has disrupted its growth trajectory this year. Nevertheless, we expect the pandemic to subside from next year and Chevron to return to growth mode thanks to its sustained growth in the Permian Basin and in Australia.

It is remarkable that Chevron has more than doubled the value of its assets in Permian in the last two years thanks to new discoveries and technological advances. Separately, Chevron acquired Noble Energy for $5 billion in an all-stock deal. The deal will provide Chevron with low-cost proved reserves and promising undeveloped resources. We expect the oil major to grow its earnings-per-share by 13% per year on average over the next five years.

Chevron’s stock valuation has fluctuated wildly over the past decade. This reflects the underlying volatility of its business model and profitability. When oil prices rise and Chevron’s profits increase, its valuation multiple shrinks. Conversely, periods of falling oil prices result in a ballooning price-to-earnings ratio.

Chevron is now trading at 16.5 times its mid-cycle earnings-per-share of $4.36. This earnings multiple is higher than its 10-year average of 15.8. If the stock reverts to its average valuation level over the next five years, it will incur a negative return for shareholders.

Offsetting this will be expected EPS growth of 13% per year and the 7.2% dividend yield, leading to total expected returns of 16.3% per year over the next five years.


Dividend Aristocrat #1: Exxon Mobil (XOM)

Like Chevron, Exxon Mobil is an integrated super-major, with operations across the oil and gas industry. In 2019, the oil major generated over 80% of its earnings from its upstream segment, with the remainder from its downstream (mostly refining) segment and its chemicals segment.

In late October, Exxon reported (10/30/20) financial results for the third quarter of fiscal 2020. Production increased 1% from the previous quarter. Overall, the company reported an adjusted loss of $0.18 per share, reversing a profit of $0.68 per share in the year-ago quarter.

Exxon will cut its capital expenses 30% this year in order to protect its dividend and will slow the development of its promising growth projects in the Permian and Guyana due to the depressed oil price. That said, we remain positive regarding Exxon’s long-term growth prospects.

According to a recent company presentation, new supply of 550 billion barrels of oil and 2,100 trillion cubic feet of natural gas are required through 2040 to meet projected global demand. In preparation, the oil major has greatly increased its capital expenses in order to grow its production from 4.0 to 5.0 million barrels per day by 2025.

The Permian Basin will be a major growth driver, as the oil giant has about 10 billion barrels of oil equivalent in the area and expects to reach production of more than 1.0 million barrels per day in the area by 2024. Guyana, one of the most exciting growth projects in the energy sector, will be another major growth driver.

Source: Investor Presentation

In 2019, Exxon Mobil made 6 major deep-water discoveries in Guyana and Cyprus. In Guyana, Exxon Mobil has started Liza Phase I ahead of schedule. Guyana’s total recoverable resources are estimated at over 8 billion oil equivalent barrels.

Like Chevron, Exxon Mobil’s growth potential is challenged by the recent decline in commodity prices, as well as the prospect of a global recession due to the coronavirus. We view the coronavirus as a short-term issue. The company announced it will reduce capital expenditures to $16 billion-$19 billion for 2020 to preserve cash in this difficult environment.

Exxon Mobil’s earnings are volatile, due to the cyclical nature of the oil and gas industry. For 2020, we expect the company to report a loss, but we recognize that the actual results could vary drastically from this estimate due to the ongoing coronavirus crisis. In order to calculate future returns, we have used mid-cycle (5-year average) earnings-per-share of $3.26 as a base.

Using this estimate, the stock trades for a P/E ratio of 10.4 compared with our fair value estimate of 13. Expansion of the P/E multiple could boost annual returns over the next five years. Because of Exxon Mobil’s depressed earnings, we expect a snap-back with 8% annual expected earnings-per-share growth over the next five years. Including the 10.2% dividend yield, we expect total annual returns above 18% per year over the next five years.

Along with Chevron, Exxon Mobil is a riskier Dividend Aristocrat due to its volatile industry. But a recovery in oil and gas prices could mean strong returns for investors willing to buy at these depressed prices.

The Dividend Aristocrats In Focus Analysis Series

You can see analysis on every single Dividend Aristocrat below. Each is sorted by GICS sectors and listed in alphabetical order by name. The newest Sure Analysis Research Database report for each security is included as well, with its date in brackets.

Consumer Staples

Industrials

Health Care

Consumer Discretionary

Financials

Materials

Energy

Information Technology

Real Estate

Telecommunication Services

Utilities

Looking for no-fee DRIP Dividend Aristocrats? Click here to read an article examining all 15 no-fee DRIP Dividend Aristocrats in detail.

Historical Dividend Aristocrats List
(1989 – 2020)

The image below shows the history of the Dividend Aristocrats Index from 1989 through 2020:

Note: CL, GPC, and NUE were all removed and re-added to the Dividend Aristocrats Index through the historical period analyzed above. We are unsure as to why. Companies created via a spin-off (like AbbVie) can be Dividend Aristocrats with less than 25 years of rising dividends if the parent company was a Dividend Aristocrat.

Historical Aristocrats Image April 2020

This information was compiled from the following sources:

Other Dividend Lists & Final Thoughts

The Dividend Aristocrats list is not the only way to quickly screen for stocks that regularly pay rising dividends.

There is nothing magical about the Dividend Aristocrats. They are ‘just’ a collection of high quality shareholder friendly stocks that have strong competitive advantages.

Purchasing these types of stocks at fair or better prices and holding for the long-run will likely result in favorable long-term performance.

You have a choice in what type of business you buy into. You can buy into the mediocre, or the excellent.

Often, excellent businesses are not more expensive (based on their price-to-earnings ratio) than mediocre businesses.

“When we own portions of outstanding businesses with outstanding managements, our favorite holding period is forever.”

Warren Buffett

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