Wednesday, December 7, 2011

Dividend Aristocrats List

The Dividend Aristocrats index was created by Standard and Poor’s, to include companies in the S&P 500 which have increased dividends for at least 25 consecutive years. The types of companies included in the index are representative of several sectors, and thus the list is relatively well diversified. The stocks offer both capital appreciation potential as well as a growing dividend payment. Besides being a member of S&P 500 index, companies need to have a float of at least $3 billion, an average daily trading volume of $5 million and have increased distributions for at least 25 years in a row. Companies are deleted from the list, if they fail to increase or cut dividends in a given year.

The index is typically rebalanced once per year in December. The number of constituents bottomed at 42 in 2010, and will increase to 50 in 2012. Recently, Standard and Poor’s announced that it would not take into account special dividends in its determination of a streak of 25 years of dividend increases in a row. As a result, several new companies were added to the index:

AT&T Inc. (T), together with its subsidiaries, provides telecommunication services to consumers, businesses, and other service providers worldwide. The company has raised dividends for 27 consecutive years. Yield: 5.90% (analysis)

HCP, Inc. (HCP) is an independent hybrid real estate investment trust. It primarily invests in properties serving the healthcare industry including sectors of healthcare such as senior housing, life science, medical office, hospital and skilled nursing. The company has raised dividends for 26 consecutive years. Yield: 5.50% (analysis)

Sysco Corporation (SYY), through its subsidiaries, engages in the marketing and distribution of a range of food and related products primarily to the foodservice or food-away-from-home industry. The company has raised dividends for 42 consecutive years. Yield: 3.70% (analysis)

Illinois Tool Works Inc. (ITW) manufactures a range of industrial products and equipment worldwide. The company has raised dividends for 48 consecutive years. Yield: 3.30%

Genuine Parts Company (GPC) distributes automotive replacement parts, industrial replacement parts, office products, and electrical/electronic materials in the United States, Puerto Rico, Canada, and Mexico. The company has raised dividends for 55 consecutive years. Yield: 3.50% (analysis)

Medtronic, Inc. (MDT) manufactures and sells device-based medical therapies worldwide. The company has raised dividends for 34 consecutive years. Yield: 3% (analysis)

Colgate-Palmolive Company (CL), together with its subsidiaries, manufactures and markets consumer products worldwide. The company has raised dividends for 48 consecutive years. Yield: 2.70% (analysis)

T. Rowe Price Group, Inc. (TROW) is a publicly owned asset management holding company. The company has raised dividends for 24 consecutive years. Yield: 2.40% (analysis)

Franklin Resources Inc. (BEN) is a publicly owned asset management holding company. The company has raised dividends for 30 consecutive years. Yield: 0.90%

The only company, removed from the index includes CenturyLink (CTL).

CenturyLink, Inc. (CTL), together with its subsidiaries, operates as an integrated communications company. The company has maintained its quarterly dividend at 72.50 cents/share for two years, which is why it is being kicked out of the index after raising distributions for 37 years in a row.

The complete listing is included below:



While I initially considered the Dividend Aristocrat’s index the cream of the crop and the first stop in my dividend research, the volume and capitalization requirements have somewhat turned me off of the index. For example, companies which have managed to raise dividends for over a quarter of a century with a market capitalization of less than $3 billion and average daily volume of less than $5 million dollars would not be included. This is the reason why I prefer to use the Dividend Champions index instead. The only drawback of the Champions index is that the total returns are not calculated, whereas the total returns on the S&P Dividend Aristocrat’s index are.

Full Disclosure: Long MMM, AFL, ABT, APD, ADM, ADP, BF/B, CB, CINF, CL, CLX, KO, ED, EMR, XOM, FDO, GWW, ITW, JNJ, KMB, LOW, MKC, MCD, MHP, MDT, PEP, PG, SYY, WMT, WAG


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4 comments:

  1. The ONLY problem I have with the Aristocrats is they have become very popular and some of them are not the greatest value. I agree investors should dig down deeper to the Dividend Achievers, Champions, and Contenders. Here you will find stocks that may be the next Aristocrat and may offer better value.

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  2. Great list.. some interesting name there still worth considering at the right times

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  3. In the chart, you have Ecolab (ECL) as raising their dividend for 19 yrs. Your paragraph above says the companies must increase their dividends for 25 yrs to make the list. Am I missing something? Did I just read your blog too fast or why are they on the list after only 19 years of raising their dividend?

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  4. What about Nucor Corp. (NUE)? New addition as well? S&P states it is.

    Rob

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