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Dividend Aristocrats: How They Can Fail You

Dividend stocks have become crucial to generate income for many investors, and many have turned to the Dividend Aristocrats as a source of investment ideas. But there's one key fact you need to know about Dividend Aristocrats before you simply pick a stock from the list and expect it to meet all your needs.

In the following video, Dan Caplinger, The Motley Fool's director of investment planning, explains how Dividend Aristocrats can fail some investors. Dan notes that dividend growth is an essential component of being a Dividend Aristocrat, and stocks on the list have raised their payouts annually for at least 25 years. But Dan also points out that there's no minimum dividend yield for an Aristocrat, using examples of Sherwin-Williams (NYSE: SHW  ) , Franklin Templeton (NYSE: BEN  ) , and Ecolab (NYSE: ECL  ) with yields in the 1% range. For many investors, yields that low won't meet their income needs, and Dan concludes that you have to look beyond the list and find out exactly how much income you can expect from any given Dividend Aristocrat before deciding whether it's suitable for your portfolio.

Get the right mix of yield and growth
In your search for the best dividend balance, you need to weigh yield and growth. But knowing this is only half the battle. The other half is identifying which dividend stocks in particular are the best. With this in mind, our top analysts put together a free list of nine high-yielding stocks that should be in every income investor's portfolio. To learn the identity of these stocks instantly and for free, all you have to do is click here now.


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Dan Caplinger
TMFGalagan

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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Related Tickers

9/29/2014 4:01 PM
BEN $54.80 Down -0.20 -0.36%
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ECL $116.32 Down -0.24 -0.21%
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SHW $221.44 Up +0.65 +0.29%
Sherwin-Williams CAPS Rating: ****

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