The following post is written by Hank Coleman.
There is a reason why the Dividend Ninja mentions Dividend Aristocrats in his Ninja Lessons investing philosophy. They are tried and true dividend winners who have consistently provided investors with increasing dividends year in and year out.
Dividend Aristocrats make a great addition to a portfolio of dividend stocks. They are a great place to start your search for the next company to add to your portfolio.
What is a Dividend Aristocrat?
The Dividend Aristocrats are defined by Standard &Poor’s S&P 500 Dividend Aristocrats Index.
Being a Dividend Aristocrat is a hard title for a company to earn, and it is even harder to keep. To get into this exclusive club, a company must consistently raise its dividends each year for 25 consecutive years. If the company simply maintains their annual dividend payout or lowers the dividend even in tough times, they are removed from the list. Additionally, it will take another 25 years to earn its place back.
The 2008 to 2009 Financial Crisis saw many bellwether stocks cut or eliminate their dividends altogether. Entire industries and companies that were considered rock solid dividend payers, lost their aristocrat status. Former stalwart stocks such as General Electric (NYSE: GE) saw their membership in the exclusive Dividend Aristocrat club revoked after cutting their dividend.
Benefits of Dividend Aristocrats in Your Portfolio
If dividend-paying stocks are stable companies that reduce your risk, then the Dividend Aristocrats are risk reduction on steroids. Granted, nothing is a guaranteed panacea for risk, and the financial crisis of 2008 showed that even the Dividend Aristocrats could be at risk for macro-level problems. However, if safety is what you are looking for, the Dividend Aristocrats are a great place to start your search. They provide consistent dividend payouts and the potential for share price appreciation.
Characteristics of a Dividend Aristocrat
Dividend Aristocrats have several of fundamental characteristics in common with each other. Most of the stocks that make the list are tried and true multinational blue chip companies. Many have a beta near 1.0 and continue to mirror overall stock market movements. Additionally, Dividend Aristocrats that are part of the S&P 500 index, have a large market capitalization and liquidity for large trading volumes.
Current Dividend Aristocrats in the S&P 500
Here is a list of the current companies that comprise the Standard & Poor’s 500 Dividend Aristocrat Index (as of August 2013).
Symbol
Company
Symbol
Company
ABBV
AbbVie Inc
HCP
HCP Inc
ABT
Abbott Laboratories
HRL
Hormel Foods Corp
ADM
Archer-Daniels-Midland Co
ITW
Illinois Tool Works Inc
ADP
Automatic Data Processing
JNJ
Johnson & Johnson
AFL
AFLAC Inc
KMB
Kimberly-Clark
APD
Air Products & Chemicals Inc
KO
Coca-Cola Co
B BF.B
Brown-Forman Corp
LEG
Leggett & Platt
BCR
Bard C.R. Inc
LOW
Lowe’s Cos Inc
BDX
Becton Dickinson & Co
MCD
McDonald’s Corp
BEN
Franklin Resources Inc
MDT
Medtronic Inc
BMS
Bemis Co Inc
MHFI
McGraw Hill Financial Inc
CAH
Cardinal Health Inc
MKC
McCormick & Co
CB
Chubb Corp
MMM
3M Co
CL
Colgate-Palmolive Co
NUE
Nucor Corp
CLX
Clorox Co
PEP
PepsiCo Inc
CTAS
Cintas Corp
PG
Procter & Gamble
CVX
Chevron Corp
PNR
Pentair Ltd.
CINF
Cincinnati Financial Corp
PPG
PPG Industries Inc
DOV
Dover Corp
SHW
Sherwin-Williams Co
ECL
Ecolab Inc
SIAL
Sigma-Aldrich Corp
ED
Consolidated Edison Inc
SWK
Stanley Black & Decker
EMR
Emerson Electric Co
SYY
Sysco Corp
FDO
Family Dollar Stores Inc
T
AT&T Inc
GPC
Genuine Parts Co
XOM
Exxon Mobil Corp
GWW
Grainger W.W. Inc
Starting with the Dividend Aristocrats, you can narrow down your search. You can focus and invest in the largest tried and true dividend payers, many with global reach.
Do you like investing in the Dividend Aristocrats? Why are they on your list? Or, why do you stay away from them? I’d love to hear your thoughts in the comment section below.
Hank Coleman is a personal finance expert who writes about finance, retirement, and investing on his blog, Money Q&A. Be sure to also follow him on Twitter @MoneyQandA and check out his podcast on,“Your Money: Your Choices”, on iTunes.
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The Dividend Ninja
btw
I just wanted to say, congrats on starting your investing and financial independence journey so early! :)
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Related Posts:
About the Ninja
Choosing a Dividend Aristocrat
The Ninja Lessons (Dojo)
Authors
Dividend Aristocrat, Dividend Aristocrats
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