2021 Dividend Aristocrats List | See All 65 Now Sure Dividend

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The 2021 Dividend Aristocrats List | See All 65 Now


Updated on January 4th, 2021 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:

 

Click here to download your Dividend Aristocrats Excel Spreadsheet List now.

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 December 2020

In December 2020, the Dividend Aristocrats, as measured by the Dividend Aristocrats ETF (NOBL), registered a positive total return of 1.1%. It underperformed 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 13.7% total annual return versus a 13.9% 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 40% 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 1.7% 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 2026. These 7 stocks represent attractive long-term buys for dividend growth investors.


Dividend Aristocrat #7: Lowe’s Companies (LOW)

Lowe’s Companies is the second-largest home improvement retailer in the US (after Home Depot). Lowe’s operates nearly 2,000 home improvement and hardware stores in the U.S. and Canada.

Lowe’s reported third-quarter results on November 18th, and recorded net earnings of $692 million, compared to net earnings of $1.0 billion in the prior year period. Excluding a negative $1.05 impact from extinguishing debt, adjusted earnings per share increased 40% to $1.98 from $1.41 in the third quarter of 2019. Comparable sales increased 30% for the quarter.

Source: Investor Presentation

The company is in a positive liquidity position with $8.2 billion of cash and cash equivalents. Lowe’s reinstated the repurchase program and bought back 3.6 million shares for $621 million. The company is forecasting to purchase $3 billion worth of stock in the next quarter as they originally estimated $5 billion of share repurchases at the beginning of the year.

This year is set to be another year of strong growth for Lowe’s. Management is forecasting adjusted diluted earnings per share of $1.10 to $1.20 for the fourth quarter. We forecast 7% annual EPS growth over the next five years.

The key to Lowe’s success over the course of 2020 has been its booming e-commerce platform. In the most recent quarter, Lowe’s registered triple-digit online sales growth. This is a key differentiator between successful retailers like Lowe’s and the many retailers that are reporting losses or going out of business. Lowe’s is benefiting right alongside the e-commerce boom.

Lowe’s enjoys competitive advantages from scale and brand power as it operates in a duopoly with Home Depot. Neither of the two are expanding their store count significantly, and neither is interested in a price war. Both should remain highly profitable, as the home improvement market in the US is large enough for two companies to succeed.

Based on expected EPS of $8.60 for the current fiscal year, Lowe’s stock trades for a P/E ratio of 18.6. Our fair value estimate is a P/E of 20. The combination of an expanding valuation, EPS growth and dividends lead to total expected returns of 10.0% per year through 2026.


Dividend Aristocrat #6: General Dynamics (GD)

General Dynamics is an aerospace & defense company that operates five business segments: Aerospace (23% of sales), Combat Systems (17%), Marine Systems (23%), Information Technology (23%), and Mission Systems (13%). The company makes the M1 Abrams tank, Stryker vehicle, Virginia-class submarine, Columbia-class submarine, and Gulfstream business jets. General Dynamics had revenue of nearly $40 billion last year.

The company reported third-quarter results on October 28th. Total revenue declined 3.4% year-over-year, while diluted earnings-per-share declined 7.6%. Declines resulted from weakness in Aerospace, Information Technology, and Mission Systems. Net debt is declining and is now 3.2% lower than last quarter at $11.9 billion.

Source: Investor Presentation

The total backlog now stands at $81.5 billion, up 21% from the same quarter last year. Revenue increased 3.5% for Combat Systems and 7.6% for Marine Systems. Information Technology revenue declined 2% while Mission Systems was flat for the quarter.

General Dynamics is an entrenched military prime contractor. It has ground and marine platforms that serve as the backbone for the U.S. Army, U.S. Navy and militaries around the world. This leads to a competitive advantage as these platforms have decades-long life cycles.

These characteristics lead to a good degree of recession resistance. For example, from 2008-2010 during the Great Recession, General Dynamics increased its earnings-per-share by 11%. General Dynamics also has a secure payout ratio at just 40% of expected fiscal 2020 adjusted earnings-per-share.

We expect 6% annual earnings-per-share growth over the next five years. This earnings-per-share growth will be achieved through a combination of rising revenue as well as share repurchases. General Dynamics’ growth is due to increasing U.S. defense spending and international sales. General Dynamics has established naval and ground platforms that support maintenance and modernization contracts, as well as future prime contract wins.

General Dynamics stock has a 3% dividend yield. The stock trades for a P/E ratio of 13.2, just below our fair value estimate of 14.0. In addition to expected EPS growth of 6% per year, total expected returns could reach 10.0% per year over the next five years.


Dividend Aristocrat #5: 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’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.

Federal Realty reported Q3 earnings on 11/5/20. FFO per share came in at $1.22, down sharply from $1.43 in the year-ago quarter. Total revenue came in at $208.2M, down from $233.2M in the year-ago quarter. Despite the steep declines, there were some positive signs.

Rent collections continued to trend positively with 85% of total Q3 rents collected. During the third quarter FRT also signed 101 leases for 481,105 square feet of retail space, demonstrating leasing volumes at pre-COVID levels. Federal Realty also recently increased its dividend for the 53rd year in a row.

Based on normalized FFO-per-share of $6.00, Federal Realty stock trades for a price-to-FFO ratio of 13.9. 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 ~5.9%, plus the 5.2% dividend yield lead to expected total annual returns of 11.6% per year over the next five years.


Dividend Aristocrat #4: 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.

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.

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 5%.

The combination of an expanding price-to-earnings multiple, future EPS growth, and dividends leads to total expected returns of 11.7% per year over the next five years.


Dividend Aristocrat #3: 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 price-to-earnings ratio of 9.0, below our fair value P/E of 11. The stock also has an attractive dividend yield of 7.1%. Combined with 3% expected annual earnings-per-share growth, we expect total annual returns of 12.5% per year over the next five years.


Dividend Aristocrat #2: Walgreens Boots Alliance (WBA)

Walgreens Boots Alliance is a pharmacy retailer with over 21,000 stores in 11 countries. The stock currently has a $35 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 8.3. 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 4.5% dividend yield to generate 12.6% annualized total returns over the next five years.


Dividend Aristocrat #1: Exxon Mobil (XOM)

Exxon Mobil is an integrated super-major, with operations across the oil and gas industry. It derives a majority 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. It also recently announced it will cut 15% of its global workforce, and incur a non-cash charge of $17 billion to $20 billion after elimination of several less-strategic assets.

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 12.8 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 8.4% dividend yield, we expect total annual returns above 16% per year over the next five years.

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

Click here to download the 1989 to 2020 Dividend Aristocrats Excel Spreadsheet.

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

Thanks for reading this article. Please send any feedback, corrections, or questions to support@suredividend.com.


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