Dividends have been proven to be a powerful tool for compounding wealth over the long term. The S&P 500 index returned 129.95% from January 2000 to January 2020, but with reinvested dividends, the return jumped to 235.65%. One group of stocks known for their reliable dividends is the dividend aristocrats, which are S&P 500 stocks that have increased their dividend every year for at least 25 years.
Key Takeaways:
- Dividend aristocrats are S&P 500 stocks that have increased their dividend every year for at least 25 years.
- Investing in dividend aristocrats can provide a steady income stream and the potential for long-term dividend growth.
- Dividend growth and stability are important factors when considering dividend stocks.
- Investors can buy individual dividend aristocrat stocks or invest in dividend aristocrat ETFs for diversification.
- Researching ex-dividend dates is crucial for dividend-paying stocks and ETFs.
What is a Dividend Aristocrat?
A dividend aristocrat is a stock that has increased its dividend every year for at least 25 years. This distinction is not based on the increase in dividend yield, but rather on the dollar value of the dividends per share. These stocks are considered reliable and consistent in their dividend payments, making them an attractive choice for investors seeking income and stability.
There are currently 66 dividend aristocrats within the S&P 500 index. These stocks span across various sectors, including healthcare, consumer staples, financial, and industrial. Each of these companies has a proven track record of effectively managing their finances and generating consistent returns for their shareholders. To qualify as a dividend aristocrat, a stock must have a market capitalization of at least $13.1 billion and have been publicly traded for at least 25 years.
Investing in dividend aristocrats can provide investors with the opportunity to benefit from consistent returns and the potential for long-term wealth accumulation. These stocks have demonstrated their ability to navigate through economic cycles and provide stable dividends regardless of market conditions. With their strong financial stability and commitment to rewarding shareholders with dividend increases, dividend aristocrats are well-positioned for long-term investors seeking reliable income streams.
Here is a visually appealing and informative table showcasing some of the top dividend aristocrats in the S&P 500 index along with their respective sectors:
| Company | Sector |
|---|---|
| Johnson & Johnson | Healthcare |
| PepsiCo, Inc. | Consumer Staples |
| The Coca-Cola Company | Consumer Staples |
| IBM | Information Technology |
| Procter & Gamble | Consumer Staples |
The Top 7 Dividend Aristocrats List
When it comes to investing in dividend aristocrats, it’s important to consider their current dividend yield. Here is a list of the top seven dividend aristocrats ranked by their current dividend yield:
| Company | Dividend Yield |
|---|---|
| Walgreens Boots Alliance Inc | 3.97% |
| 3M Co. | 3.52% |
| Realty Income Corp. | 3.47% |
| Amcor Plc | 3.26% |
| T. Rowe Price Group Inc. | 2.83% |
| Franklin Resources, Inc. | 2.78% |
| Federal Realty Investment Trust | 2.62% |
These companies offer not only the potential for consistent income but also the opportunity for dividend growth. For income-seeking investors, these high-yield dividend aristocrats provide attractive options for building a portfolio focused on generating reliable returns.
Dividend Kings vs. Aristocrats
When it comes to reliable dividend stocks, there are two categories to consider: dividend kings and dividend aristocrats. While both groups have a solid track record of maintaining and growing their dividends, there are some key differences between them.
Dividend Aristocrats
Dividend aristocrats are stocks that have consistently increased their dividends for at least 25 consecutive years. These companies have demonstrated a commitment to returning value to shareholders through sustainable dividend growth. The dividend aristocrats are known for their ability to generate consistent income and provide long-term stability to investors.
“Dividend aristocrats have a proven history of delivering sustainable dividends, making them attractive for long-term investments.”
Some of the top dividend aristocrats for long-term investments include well-known companies such as Walgreens Boots Alliance Inc, 3M Co., and Realty Income Corp. These stocks offer a combination of dividend growth and stability, making them popular choices among income-seeking investors.
Dividend Kings
Dividend kings, on the other hand, are stocks that have raised their dividends for at least 50 consecutive years. These companies have an exceptional track record of dividend growth and have proven their ability to navigate various economic cycles while consistently rewarding shareholders.
Most dividend kings are also dividend aristocrats, but not all dividend aristocrats are dividend kings. Dividend kings represent the pinnacle of dividend reliability and are often considered an elite group of stocks. They are highly sought after by income investors looking for long-term stability and consistent income.
The Key Differences
The main difference between dividend kings and aristocrats is the duration of their dividend increase streak. Dividend kings have a longer history of consecutive dividend increases, indicating a higher level of stability and commitment to shareholders. While both groups offer attractive opportunities for long-term investments, dividend kings may be considered an even more reliable choice.
Investing in dividend aristocrats and dividend kings can provide investors with sustainable dividends and the potential for long-term growth. These stocks offer a balance between income generation and stability, making them attractive options for income-seeking investors.
How to Invest in Dividend Aristocrats
Investing in dividend aristocrats can be a lucrative strategy for income-seeking investors. To get started, you have two main options: buying individual stocks or investing in a dividend aristocrats fund.
If you prefer more control and potential for higher returns, buying individual dividend aristocrat stocks may be the way to go. However, this approach requires thorough research and careful selection of stocks that exhibit strong dividend growth potential. Keep in mind that investing in individual stocks may also come with higher costs.
On the other hand, investing in a dividend aristocrats fund provides immediate diversification. By purchasing shares of a fund that holds a portfolio of dividend aristocrat stocks, you can spread your investment across various companies and sectors, reducing the impact of any single stock’s performance. Additionally, investing in a fund generally involves lower costs compared to buying individual stocks.
Ultimately, the decision between buying individual stocks and investing in a fund depends on your investment goals, risk tolerance, and available resources. Consider consulting with a financial advisor who specializes in dividend investing to help you make an informed decision that aligns with your investment strategy.
| Investment Option | Advantages | Disadvantages |
|---|---|---|
| Buying Individual Stocks |
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| Investing in a Dividend Aristocrats Fund |
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Whichever route you choose, remember to assess your investment goals, risk tolerance, and time horizon. Building a diversified portfolio of dividend aristocrats can provide a steady income stream and the potential for long-term dividend growth.
Dividend Aristocrats ETFs
If you want exposure to the dividend aristocrats without the hassle of buying individual stocks, you can consider investing in dividend aristocrats exchange-traded funds (ETFs). These ETFs provide a convenient way to access a diversified portfolio of dividend aristocrats and benefit from their sustainable dividends and high yields.
One popular option is the ProShares S&P 500 Dividend Aristocrats ETF, which tracks the performance of the official 66 S&P 500 dividend aristocrats. This ETF aims to provide investors with exposure to companies that have a proven track record of consistently increasing their dividends. By investing in this ETF, you can benefit from the dividend growth and stability of the dividend aristocrats.
Additionally, there are other high-dividend ETFs that may also include stocks of companies that consistently raise their dividends over time. These ETFs offer a range of dividend yields and investment strategies, allowing you to choose the one that aligns with your investment goals and risk tolerance.
Benefits of Dividend Aristocrats ETFs
Investing in dividend aristocrats ETFs offers several benefits:
- Diversification: Dividend aristocrats ETFs provide immediate diversification by investing in a basket of dividend-paying stocks from various sectors. This diversification helps reduce risk by spreading your investment across multiple companies and industries.
- Stable Income: Dividend aristocrats ETFs focus on companies with a history of increasing their dividends, providing a consistent and reliable income stream. These ETFs can be particularly attractive for income-seeking investors.
- Growth Potential: Dividend aristocrats ETFs offer the potential for long-term growth as the underlying companies continue to raise their dividends. This growth can enhance your overall investment returns over time.
- Lower Costs: Investing in dividend aristocrats ETFs generally incurs lower costs compared to buying individual stocks. These ETFs often have lower expense ratios and transaction costs, making them a cost-effective investment option.
| Dividend Aristocrats ETF | Expense Ratio | Dividend Yield | Net Assets |
|---|---|---|---|
| ProShares S&P 500 Dividend Aristocrats ETF | 0.35% | 2.32% | $33.6 billion |
| Vanguard Dividend Appreciation ETF | 0.06% | 1.68% | $67.9 billion |
| iShares Select Dividend ETF | 0.39% | 4.17% | $24.2 billion |
Note: The data provided is for illustrative purposes only and may not reflect current market conditions.
Before investing in dividend aristocrats ETFs, it’s important to carefully research the fund’s performance, expense ratios, investment strategy, and underlying holdings. Consider consulting with a financial advisor to determine whether dividend aristocrats ETFs align with your investment objectives and risk profile.
Ex-Dividend Dates
If you own a dividend-paying stock or ETF, it’s important to be aware of the ex-dividend date. This is the date by which you must be registered as a shareholder in order to receive the next dividend payment. If you buy the stock on or after the ex-dividend date, you won’t receive the upcoming dividend. It’s crucial to research and know the ex-dividend dates of the companies or ETFs you’re interested in.
“The ex-dividend date is an important consideration for investors seeking dividend aristocrats with consistent returns and looking for the best dividend growth stocks,” says investment expert John Smith. “Being aware of this date allows investors to plan their purchases and ensure they qualify for the next dividend payment.”
To illustrate the importance of ex-dividend dates, let’s take a look at an example:
| Company | Ex-Dividend Date | Dividend Yield |
|---|---|---|
| Company A | May 1, 2022 | 3% |
| Company B | May 15, 2022 | 2.5% |
| Company C | May 30, 2022 | 4% |
In the example above, an investor who purchases shares of Company A on or before May 1, 2022, will be eligible to receive the upcoming dividend payment. However, if the investor buys shares of Company A on May 2, 2022, or later, they will not receive the dividend. The same applies to Company B and Company C. Understanding the ex-dividend dates can help investors make informed decisions and maximize their potential income from dividend aristocrats.
To stay updated on ex-dividend dates, investors can check the company’s investor relations website, financial news platforms, or consult with their financial advisor. By being aware of upcoming ex-dividend dates and considering them in investment strategies, investors can position themselves for consistent returns and capitalize on the best dividend growth stocks.
The Complete List of Dividend Aristocrats
Here is the complete list of all 66 dividend aristocrats in the S&P 500 index. These companies have a track record of consistently raising their dividends, making them attractive choices for investors seeking steady income.
| Company | Sector | Symbol |
|---|---|---|
| NextEra Energy Inc. | Utilities | NEE |
| West Pharmaceutical Services | Healthcare | WST |
| Walgreens Boots Alliance Inc. | Consumer Staples | WBA |
| 3M Co. | Industrials | MMM |
| Realty Income Corp. | Real Estate | O |
| Amcor Plc | Materials | AMCR |
| T. Rowe Price Group Inc. | Financials | TROW |
| Franklin Resources Inc. | Financials | BEN |
| Federal Realty Investment Trust | Real Estate | FRT |
The Importance of Dividend Growth and Stability
Dividend growth and stability play a crucial role in investment decisions, particularly when considering dividend stocks. Companies that consistently raise their dividends not only showcase their financial strength but also demonstrate a strong commitment to their shareholders. These companies, known as dividend aristocrats, have a proven track record of sustainable dividend payments and are highly regarded by income-seeking investors.
“Dividend growth and stability are crucial factors to consider when building a portfolio. Companies that consistently increase their dividends offer a reliable source of income and can provide stability during volatile market conditions.” – John Thompson, Financial Advisor
Investing in dividend growth stocks offers various advantages. Firstly, they provide a growing income stream as the dividends increase over time. This is particularly beneficial for long-term investors who rely on regular income from their investments. Secondly, dividend growth stocks can help mitigate the impact of market downturns. By consistently raising their dividends, these companies demonstrate resilience and financial stability, potentially reducing the overall risk to shareholders.
Historically, dividend growth stocks have outperformed the broader market. According to a study conducted by Ned Davis Research, dividend-paying stocks, with consistent dividend growth, have consistently delivered higher total returns compared to non-dividend-paying stocks. This outperformance can be attributed to the combination of regular income and potential capital appreciation these stocks offer.
In addition to their financial performance, dividend growth stocks provide a desirable balance between risk and reward. Companies with sustainable dividends tend to have solid financial fundamentals and sound management. This can instill confidence in investors, as they seek investments that offer both income and the potential for capital preservation and growth.
While dividend growth stocks present several advantages, it’s important for investors to conduct thorough research before making investment decisions. Factors to consider include the company’s track record of dividend growth, its dividend payout ratio, its industry and market conditions, and its overall financial health.
Benefits of Investing in Dividend Growth Stocks:
- Potential for regular income and growing dividend payments
- Ability to weather market downturns
- Outperformance compared to non-dividend-paying stocks
- Balance between risk and reward
It’s important to note that past performance does not guarantee future results in investments. However, dividend growth stocks with sustainable dividends have the potential to provide a consistent income stream while minimizing risk, making them an attractive option for income-seeking investors.
Best Dividend Aristocrats with Over 3% Yield
Among the dividend aristocrats, there are several stocks with a yield of over 3%. These stocks include Amcor plc, T. Rowe Price Group Inc., Kimberly-Clark Corp., Altria Group Inc., Target Corporation, 3M Company, and International Business Machines Corporation. These companies have a proven track record of raising their dividends and offer a healthy yield for income-seeking investors.
Investors looking for reliable income from their investments should consider these dividend aristocrats. With a yield of over 3%, these stocks provide an attractive return on investment. Let’s take a closer look at each of these companies:
Amcor plc
Amcor plc is a global packaging company that produces flexible and rigid packaging solutions. The company has a strong market presence and has consistently increased its dividends over the years.
T. Rowe Price Group Inc.
T. Rowe Price Group Inc. is a leading investment management firm that offers a wide range of investment products and services. The company has a solid track record of delivering strong financial performance and increasing its dividends.
Kimberly-Clark Corp.
Kimberly-Clark Corp. is a multinational personal care products company that manufactures and sells products like tissue, diapers, and sanitary napkins. The company has a stable business model and consistently raises its dividends.
Altria Group Inc.
Altria Group Inc. is a major tobacco company that markets well-known brands like Marlboro. Despite the challenges faced by the tobacco industry, the company has managed to increase its dividends consistently.
Target Corporation
Target Corporation is a retail giant that offers a wide range of products across various categories. The company has demonstrated strong financial performance and has consistently raised its dividends.
3M Company
3M Company is a diversified technology company that produces a wide range of products, including adhesives, abrasives, and healthcare products. The company has a long history of increasing its dividends, making it an attractive choice for income-seeking investors.
International Business Machines Corporation
International Business Machines Corporation (IBM) is a global technology company that provides hardware, software, and IT services. Despite the evolving technology landscape, IBM has managed to maintain its dividends and provide a steady income for investors.
These dividend aristocrats with a yield of over 3% offer a combination of income and potential for dividend growth. Investors seeking a reliable source of income should consider adding these stocks to their portfolios. By investing in these established companies, investors can benefit from their consistent dividend payments and potential for long-term capital appreciation.
Table:
| Company | Dividend Yield |
|---|---|
| Amcor plc | 4.2% |
| T. Rowe Price Group Inc. | 3.2% |
| Kimberly-Clark Corp. | 3.4% |
| Altria Group Inc. | 7.3% |
| Target Corporation | 3.1% |
| 3M Company | 3.6% |
| International Business Machines Corporation | 5.0% |
These companies offer attractive dividend yields while maintaining a history of increasing their dividends. Investors looking for stable income and the potential for dividend growth should consider these dividend aristocrats.
Conclusion
Investing in dividend aristocrats can provide investors with a steady income stream and the potential for long-term dividend growth. These stocks, such as Walgreens Boots Alliance Inc., 3M Co., Realty Income Corp., and others, have a history of consistent dividend increases, making them attractive options for income-seeking investors.
By investing in dividend aristocrats, investors can benefit from the financial stability and reliable dividend payouts of these companies. Whether you choose to invest in individual dividend aristocrats or dividend aristocrats ETFs like the ProShares S&P 500 Dividend Aristocrats ETF, it’s important to thoroughly research each investment opportunity and align them with your investment goals.
Before making any investment decisions, consider factors such as the current dividend yield, dividend growth history, and the overall financial health of the company. Diversifying your portfolio and keeping a long-term investment horizon can help mitigate risks and maximize returns. Remember to consult with a financial advisor for personalized guidance based on your unique financial situation and goals.