The Dividend Aristocrats list includes companies in the S&P 500, which have managed to increase annual dividends for at least 25 years in a row. There are only 65 companies that fit its stringent requirements.
I often use this list as a starting point for further research. I believe that most of the companies in it are of high quality, and have strong competitive positions in their respected industries. However, I do not believe that all companies are automatic buys at all times.
In order to focus on companies whose recent dividend growth has been supported by earnings growth, I reviewed the financials for all 65 dividend aristocrats. I looked at a ten year summary of earnings for each company, in order to determine if earnings are growing. Without growth in earnings per share, a company cannot grow dividends, and it will not grow intrinsic value per share.
As a result of my review, I came up with a list of 35 dividend aristocrats for further research:
|
Name |
Name |
Years Annual Dividend Increases |
10 year Dividend Growth |
P/E Ratio |
Dividend Yield |
Dividend Payout Ratio |
|
ABT |
Abbott Laboratories |
49 |
7.15% |
24.06 |
1.61% |
38.74% |
|
ADP |
Automatic Data Processing |
46 |
11.45% |
29.37 |
2.08% |
61.09% |
|
AFL |
Aflac |
40 |
7.94% |
12.01 |
2.53% |
30.39% |
|
AOS |
A. O. Smith |
28 |
21.60% |
20.06 |
1.61% |
32.30% |
|
APD |
Air Products and Chemicals |
39 |
10.11% |
23.44 |
2.68% |
62.82% |
|
ATO |
Atmos Energy |
38 |
6.47% |
19.26 |
2.57% |
49.50% |
|
BF.B |
Brown-Forman |
37 |
7.50% |
39.82 |
1.13% |
45.00% |
|
BRO |
Brown & Brown |
28 |
8.87% |
28.16 |
0.62% |
17.46% |
|
CB |
Chubb |
28 |
8.80% |
13.82 |
1.56% |
21.56% |
|
CHD |
Church & Dwight Co. |
25 |
11.50% |
30.81 |
1.09% |
33.58% |
|
CINF |
Cincinnati Financial |
61 |
4.51% |
23.39 |
2.23% |
52.16% |
|
CTAS |
Cintas |
39 |
20.20% |
33.89 |
1.02% |
34.57% |
|
DOV |
Dover |
66 |
7.28% |
18.47 |
1.26% |
23.27% |
|
EMR |
Emerson Electric |
65 |
3.53% |
18.72 |
2.22% |
41.56% |
|
ESS |
Essex Property Trust |
27 |
7.23% |
22.61 |
2.65% |
59.92% |
|
EXPD |
Expeditors International of
Washington |
27 |
8.78% |
13.9 |
1.09% |
15.15% |
|
GD |
General Dynamics |
30 |
9.82% |
17.85 |
2.21% |
39.45% |
|
GPC |
Genuine Parts Company |
65 |
6.04% |
16.69 |
2.90% |
48.40% |
|
GWW |
W.W. Grainger |
50 |
9.75% |
19.37 |
1.37% |
26.54% |
|
HRL |
Hormel Foods |
54 |
14.41% |
24.21 |
2.19% |
53.02% |
|
JNJ |
Johnson & Johnson |
59 |
6.42% |
15.53 |
2.60% |
40.38% |
|
LOW |
Lowe's Companies |
59 |
18.80% |
18.62 |
1.44% |
26.81% |
|
MCD |
McDonald's |
46 |
7.57% |
24.67 |
2.20% |
54.27% |
|
MKC |
McCormick & Company |
35 |
9.28% |
30.67 |
1.51% |
46.31% |
|
MMM |
3M |
63 |
10.41% |
14.19 |
4.04% |
57.33% |
|
O |
Realty Income |
29 |
5.02% |
19.65 |
4.48% |
88.03% |
|
PG |
The Procter & Gamble |
65 |
5.16% |
27.07 |
2.18% |
59.01% |
|
PPG |
PPG Industries |
50 |
7.18% |
20.03 |
1.61% |
32.25% |
|
ROP |
Roper Technologies |
29 |
17.73% |
28.32 |
0.56% |
15.86% |
|
SHW |
The Sherwin-Williams |
43 |
16.28% |
28.27 |
0.90% |
25.44% |
|
SPGI |
S&P Global |
48 |
11.91% |
25.97 |
0.81% |
21.04% |
|
SWK |
Stanley Black & Decker |
54 |
6.15% |
13.33 |
1.95% |
25.99% |
|
TGT |
Target |
54 |
11.13% |
15.45 |
1.76% |
27.19% |
|
TROW |
T. Rowe Price Group |
35 |
13.29% |
11.85 |
3.35% |
39.70% |
|
WST |
West Pharmaceutical Services |
29 |
7.18% |
40.06 |
0.20% |
8.01% |
You can view the company, ticker, and ten year dividend growth. I have also included P/E ratio and dividend yield, as well as dividend payout ratio.
Each of these companies has managed to grow earnings over the past decade, which means that dividends have been well supported. If these companies can continue growing earnings per share over the next decade or two, I am confident that they would continue their streak of consecutive annual dividend increases.
However, our work here is not done. Just because we have identified a group of companies for further research, which I would love to own forever, that still doesn't mean that these companies are automatic buys today. Some of these companies seem attractively valued to me today, based on a combination of their P/E ratios and dividend growth.
Others however seem a little pricey. Therefore, they would likely find a place in my portfolio if they become more attractively valued. This can be achieved either by earnings per share growth, by declines in the share price, or a combination of the two.
This my general framework on how I value companies. I take into consideration many inputs, such as P/E, interest rates, stability of earnings, dividend growth, in order to come up with a general idea of what to invest my money in. It is not a formula however.
It is helpful to be prepared to act when the right opportunities present themselves. This is why I have a watchlist and general ideas on valuation, so I can act when the time is right.
Relevant Articles:
- Dividend Growth Investor Newsletter
- Dividend Aristocrats List for 2022
- How to value dividend stocks
- Rising Earnings – The Source of Future Dividend Growth