Wednesday, May 6, 2009

The New Dividend Aristocrats

The dividend aristocrats universe is shrinking according to analysts as some companies freeze dividends while others cut their payments. S&P might even consider lowering the standards for the elite dividend index. One of the criteria that could be lowered is the requirement for annual dividend increases to 20 years or fewer. This is in response to the fact that the number of aristocrats has decreased from 64 in 2001 to potentially less than 40 by year-end.

The stocks that come to mind as solid candidates for the Dividend Aristocrats index is AT&T (T) and Brown Forman (BF-B). AT&T has increased its dividends for 25 consecutive years and is a member of the S&P 500. AT&T last raised its quarterly dividends in December 2008 by 2.5% to $0.41/share. The stock currently yields 6.40%. Check my analysis of AT&T.

Brown Forman (BF-B) has increased its dividends for 25 consecutive years as well. The company engages in the manufacture, bottling, import, export, and marketing of alcoholic beverage brands. Some of its well-known brands include Jack Daniel's, Finlandia, and Southern Comfort. The stock currently yields 2.60%.

If the criteria were lowered to including stocks, which have raised dividends for 20 years, this could bring in these S&P 500 stocks to the index:

Cintas Corp (CTAS), which provides corporate identity uniforms and related business services in the United States and Canada, has increased its dividends for over 22 consecutive years. The Cincinnati, Ohio based company currently yields 1.80%.

Health Care Property Investors Inc (HCP), operates as a real estate investment trust in the United States. HCP has an uninterrupted record of increasing distribution for 23 consecutive years. The REIT currently yields 9.30%.

McCormick & Company (MKC), which engages in the manufacture, marketing, and distribution of flavor products and other specialty food products to the food industry worldwide, has rewarded shareholders with consistent dividend increases for 22 consecutive years. The stock currently yields 3.30%.

Northern Trust (NTRS) has increased dividends for 22 consecutive years. The provider of banking and financial services to large and mid-sized corporations and financial institutions currently yields 2.10%.

T. Rowe Price Group, Inc. (TROW) which provides investment management services to corporations, corporate, public, and Taft-Hartley retirement plans, foundations, and endowments has increased payouts for 22 consecutive years. This financial company currently yields 2.70%.

Chevron Corp (CVX) has consistently increased dividends for 21 years. This integrated energy company worldwide currently yields 4.10%. Check my analysis of Chevron Corp.

The Travelers Companies (TRV), which is a provider of various commercial and personal property and casualty insurance products and services to businesses, government units, associations, currently yields 3%. The stock has raised dividends for 21 consecutive years.

Progress energy (PGN), which engages in the generation, transmission, distribution, and sale of electricity in North Carolina, South Carolina and Florida has a record of 21 consecutive annual dividend increases. This utility currently yields 7.30%.

At the end of the day I agree with the Bloomberg article that “In the end it isn't the number of stocks you own, but owning the right stocks.” If the S&P lowered its criteria for inclusion in the elite dividend index, then this would distort the basket.

Relevant Articles:

- S&P ‘Dividend Aristocrats’ Dwindle as Payouts Are Cut
- Why do I like Dividend Aristocrats?
- Dividend Aristocrats List for 2009
- Dividend Aristocrats keep raising their dividends
- AT&T (T) Dividend Stock Analysis

3 comments:

  1. Do you ever think that dividend investing is too limited? If you are interested an income stream for the future, why wouldn't you invest in the best opportunities that you could find, regardless of dividend state. Then down the road, harvest your gains and roll the proceeds into dividend stocks at that time, or even an annuity. I have a post on the downsides of dividends here: http://bootstrapinvesting.com/2009/04/20/why-dividends-suck.aspx
    I'd be interested in your thoughts.

    ReplyDelete
  2. Your site if very insightful. As a new investor it is always helpful to have the impressions of a seasoned investor like you and learn more about the strategy of dividend investing.

    Keep up the good work! I'll remain updated.

    ReplyDelete
  3. Bootstrap and GIT

    Thanks for commenting!

    Best Regards,

    DGI

    ReplyDelete

Questions or comments? You can reach out to me at my website address name at gmail dot com.

Popular Posts