Updated January 1st, 2018
The Dividend Aristocrats are a select group of 50 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:
- Be in the S&P 500
- Have 25+ consecutive years of dividend increases
- Meet certain minimum size & liquidity requirements
There are currently 50 Dividend Aristocrats. You can download an Excel spreadsheet of all 50 (with metrics that matter) by clicking the link below:
Note: In 2017, General Dynamics (GD) and Federal Realty Investment Trust (FRT) were added to the Dividend Aristocrats Index and HCP, Inc. (HCP) was removed from the Index.
Source: S&P News Release
You can see detailed analysis on all 50 further below in this article. Analysis includes valuation, growth, and competitive advantage(s).
The downloadable Dividend Aristocrats Excel Spreadsheet List below contains the following for each stock in the index:
- 10 Year historical price-to-earnings ratio
- Price-to-earnings ratio
- Expected total return
- Modified PEG ratio
- Dividend yield
- 5 Year Beta
- Growth rate
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. You can use the Dividend Aristocrats spreadsheet to quickly find quality dividend investment ideas.
How to Use The Dividend Aristocrats List To Find Dividend Investment Ideas
The list of all 50 Dividend Aristocrats is valuable because it gives you a concise list of all S&P 500 stocks with 25+ consecutive years of dividend increases.
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. Growth and value must be considered as well.
The spreadsheet above allows you to sort by forward price-to-earnings ratio (or PEG 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:
- Download the list
- Sort by PEG ratio, smallest to largest
- 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: Click on the small gray down arrow next to ‘Modified PEG”, and then click on ‘Smallest to Largest’.
Step 3: 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.
Table of Contents
- Sector Overview
- Dividend Aristocrats Analysis (The Dividend Aristocrats In Focus Series)
- Historical Dividend Aristocrats List (1989 – 2015)
- Final Thoughts
The Dividend Aristocrats Index has outperformed the market by a wide margin over the last decade – with lower volatility.
Source: S&P Fact Sheet
The performance of the Dividend Aristocrats by calendar year versus the S&P 500 is shown in the image below:
The Dividend Aristocrats index has produced excellent risk-adjusted returns over the last 25 years.
The Dividend Aristocrat Index’s annualized risk-adjusted returns are far in excess of the S&P 500’s over the last decade.
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%. 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.
The Dividend Aristocrats Index has trounced the market over the last decade…
I believe dividend paying stocks outperform non-dividend paying stocks for three reasons:
- 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.
- 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.
- Stocks that pay dividends are willing to reward shareholders with cash payments. This is a sign that management is shareholder friendly.
I believe that 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.
A sector breakdown of the Dividend Aristocrats index is shown below:
The top 3 sectors by weight in the Dividend Aristocrats are Consumer Staples, Industrials, and Health Care. The weight of these sectors in the S&P 500 is shown below for comparison:
- Consumer Staples: 9.0%
- Industrials: 10.3%
- Health Care: 14.5%
The Dividend Aristocrats Index is tilted toward Consumer Staples and Industrials relative to the S&P 500.
It is also significantly underweight the Information Technology sector.
The IT sector comprises 22.3% of the S&P 500, and just 2.2% of the Dividend Aristocrats Index.
The Dividend Aristocrats Index is similar to Warren Buffett’s dividend holdings; underweight technology, overweight high quality established businesses in stable industries.
The Dividend Aristocrat Index is filled with stable ‘old economy’ 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 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:
- Archer-Daniels-Midland (ADM)
- Brown-Forman (BF-B)
- Colgate-Palmolive (CL)
- Clorox (CLX)
- Coca-Cola (KO)
- Hormel Foods (HRL)
- Kimberly-Clark (KMB)
- McCormick & Company (MKC)
- PepsiCo (PEP)
- Procter & Gamble (PG)
- Sysco Corporation (SYY)
- Wal-Mart (WMT)
- Walgreens Boots Alliance (WBA)
- Cintas (CTAS)
- Dover (DOV)
- Emerson Electric (EMR)
- Illinois Tool Works (ITW)
- 3M (MMM)
- Pentair (PNR)
- Stanley Black & Decker (SWK)
- W.W. Grainger (GWW)
- General Dynamics (GD)
- Abbott Laboratories (ABT)
- AbbVie (ABBV)
- Becton, Dickinson & Company (BDX)
- Cardinal Health (CAH)
- Johnson & Johnson (JNJ)
- Medtronic (MDT)
- Genuine Parts Company (GPC)
- Leggett & Platt (LEG)
- Lowe’s (LOW)
- McDonald’s (MCD)
- Target (TGT)
- V.F. Corporation (VFC)
- Aflac (AFL)
- Cincinnati Financial (CINF)
- Franklin Resources (BEN)
- S&P Global (SPGI)
- T. Rowe Price Group (TROW)
- Air Products and Chemicals (APD)
- Ecolab (ECL)
- PPG Industries (PPG)
- Sherwin-Williams (SHW)
- Nucor (NUE)
Looking for no-fee DRIP Dividend Aristocrats? This article examines all 15 no-fee DRIP Dividend Aristocrats in detail.
Historical Dividend Aristocrats List
(1989 – 2016)
The image below shows the history of the Dividend Aristocrats Index from 1989 through 2016:
Note: CL, GPC, and NUE were all removed and re-added to the Dividend Aristocrats Index through the historical period analyzed above. I am unclear as to the reasoning behind this.
This information was compiled from the following sources:
Interested in why companies were removed from the Dividend Aristocrats Index?
Take a look at this article for a review of why companies fell off the list.
You can see the (amazing) 25 year historical performance of the Top 9 Dividend Aristocrats here.
Other Dividend Lists & Final Thoughts
The Dividend Aristocrats list is not the only way to quickly screen for businesses that regularly pay rising dividends.
- The Dividend Achievers List is comprised of more than 250 businesses with 10+ 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 Sure Dividend Blue Chip Stocks List has 30+ businesses with 100+ year operating histories and dividend yields of 3% or more.
- The High Dividend Stocks List includes over 400 businesses with 5%+ yields
- The Monthly Dividend Stocks List includes every stock that pays monthly dividends. There are currently 29.
There is nothing magical about the Dividend Aristocrats. They are ‘just’ a collection of high quality shareholder friendly businesses that have strong competitive advantages.
Purchasing this type of business 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