A Dividend Aristocrat is a company in the S&P 500 that has paid and increased its base dividend every year for at least 25 consecutive years. S&P Dow Jones Indices, which owns the S&P 500 index, reviews the list of qualifying companies every year and updates the list of companies that carry Dividend Aristocrat status. Their impressive track records of dividend growth make Dividend Aristocrats some of the most attractive dividend stocks to own.
Keep reading below for the full current list of Dividend Aristocrats, including how many consecutive years each company has raised its dividend; an index based on the Dividend Aristocrats; and more on what makes Dividend Aristocrats attractive to own.
Dividend Aristocrats list
As of July 1, 2020 there are 66 Dividend Aristocrats. Here's the full list, sorted by how many consecutive years each has increased its dividend:
|Company||Sector||Consecutive Years of Dividend Growth|
|Coca-Cola (NYSE:KO)||Consumer staples||57|
|Colgate-Palmolive (NYSE:CL)||Consumer staples||57|
|Emerson Electric (NYSE:EMR)||Industrials||57|
|Genuine Parts (NYSE:GPC)||Consumer discretionary||57|
|Johnson & Johnson (NYSE:JNJ)||Healthcare||57|
|Procter & Gamble (NYSE:PG)||Consumer staples||57|
|Stanley Black & Decker (NYSE:SWK)||Industrials||52|
|Hormel Foods (NYSE:HRL)||Consumer staples||51|
|Becton, Dickinson & Co. (NYSE:BDX)||Healthcare||48|
|Illinois Tool Works (NYSE:ITW)||Industrials||48|
|Leggett & Platt (NYSE:LEG)||Consumer discretionary||48|
|PPG Industries (NYSE:PPG)||Materials||48|
|Target (NYSE:TGT)||Consumer discretionary||48|
|W.W. Grainger (NYSE:GWW)||Industrials||48|
|Abbott Laboratories (NYSE:ABT)||Healthcare||47|
|Federal Realty Investment Trust (NYSE:FRT)||Real estate||47|
|Kimberly Clark (NYSE:KMB)||Consumer staples||47|
|PepsiCo (NYSE:PEP)||Consumer staples||47|
|VF Corp. (NYSE:VFC)||Consumer discretionary||47|
|S&P Global (NYSE:SPGI)||Financials||46|
|Archer Daniels Midland (NYSE:ADM)||Consumer staples||45|
|Automatic Data Processing (NASDAQ:ADP)||Information technology||45|
|Consolidated Edison (NYSE:ED)||Utilities||45|
|Lowe's (NYSE:LOW)||Consumer discretionary||45|
|Walgreens Boots Alliance (NASDAQ:WBA)||Consumer staples||44|
|Clorox (NYSE:CLX)||Consumer staples||43|
|McDonald's (NYSE:MCD)||Consumer discretionary||43|
|Walmart (NYSE:WMT)||Consumer staples||43|
|Sysco (NYSE:SYY)||Consumer staples||39|
|Franklin Resources (NYSE:BEN)||Financials||38|
|Cincinnati Financial (NASDAQ:CINF)||Financials||37|
|Air Products & Chemicals (NYSE:APD)||Materials||37|
|Amcor PLC (NYSE:AMCR)*||Materials||36|
|AT&T (NYSE:T)||Communications services||35|
|Brown-Forman (B Shares) (NYSE:BF.B)||Consumer staples||35|
|McCormick & Co. (NYSE:MKC)||Consumer staples||34|
|T. Rowe Price Group (NASDAQ:TROW)||Financials||33|
|Cardinal Health (NYSE:CAH)||Healthcare||32|
|Atmos Energy Corporation (NYSE:ATO)*||Utilities||32|
|General Dynamics (NYSE:GD)||Industrials||28|
|A.O. Smith (NYSE:AOS)||Industrials||27|
|Roper Technologies (NYSE:ROP)||Industrials||27|
|People's United Financial (NASDAQ:PBCT)||Financials||26|
|Carrier Global Corp (NYSE:CARR)**||Industrials||26|
|Otis Worldwide Corp (NYSE:OTIS)**||Industrials||26|
|Raytheon Technologies Corp (NYSE:RTX)***||Industrials||26|
|Albemarle Corp (NYSE:ALB)*||Materials||25|
|Essex Property Trust Inc (NYSE:ESS)*||Real estate||25|
|Expeditors International of Washington, Inc (NASDAQ:EXPD)*||Industrials||25|
|Realty Income Corporation (NYSE:O)*||Real estate||25|
|Ross Stores, Inc (NASDAQ:ROST)****||Consumer Discretionary||25|
How Dividend Aristocrats are selected
The standards for Dividend Aristocrats make this a difficult list to get on, but when companies reach Dividend Aristocrat status, they are likely to retain it. A company must meet the following four criteria to become (and to remain) a Dividend Aristocrat:
- Be a member of the S&P 500.
- Increase its per-share base dividend (excluding special dividends) every year for at least 25 consecutive years.
- Have a minimum float-adjusted (excluding "closely held" shares owned by insiders or founders) market capitalization of at least $3 billion.
- Average at least $5 million in daily share trading value for the three months prior.
Why the criteria above like market cap and trading volume? In part, because this is a very popular index of stocks. The companies included need to be large enough, and their share volume needs to be substantial enough, to meet the demand for millions of potential investors.
Moreover, the requirements tend to result in less turnover in the list, since only the biggest companies with many years of dividend payouts and growth can make the cut. They're more likely to remain stalwarts, and less likely to be acquired by even larger companies.
S&P Dow Jones Indices also makes adjustments based on other occasional criteria:
- The index can never fall below 40 stocks. If at any point, fewer than 40 stocks meet the requirements above, the index can include stocks with at least 20 years of consecutive dividend increases to get to the minimum of 40 stocks. If more than one qualifies, the ones with the highest dividend yield are chosen first.
- A single sector may not carry too much weight. If any sector is worth more than 30% of the index, S&P will follow the same methodology as above -- adding stocks outside that particular industry with at least 20 years of dividend growth to the index -- to reduce concentration in that industry below 30%.
Are Dividend Aristocrats good investments?
Historically speaking, yes, but it also depends on what you're looking for from your investment. Fans of dividend investing appreciate a reliable source of income, so companies that pay a dividend and have managed to increase that dividend for at least 25 years are great investment opportunities. It takes a combination of great products or services, strong competitive advantages, and talented management skilled at allocating capital (often across multiple leadership teams, as executives come and go) to pull all that off.
Beyond the qualifying criteria to make the Dividend Aristocrats Index, these companies also tend to share other characteristics. They're often leaders in their industries with durable competitive advantages, operations that generate strong and reliable cash flow, and track records of generating impressive annual returns over the long term.
In recent history, Dividend Aristocrats, as a group, have underperformed the S&P 500 in total returns:
Yet even within that underperformance in total returns, investors who prioritize a higher dividend yield and dividend growth should still look at the S&P Dividend Aristocrats. The dividend yield of the group is generally much higher than the S&P 500; at this writing it is 2.4% versus 1.9% for the broader index.
When it comes to dividend growth, Dividend Aristocrats absolutely shine:
Since 2014, the Dividend Aristocrats Index has increased the dividend payout five times faster than the S&P 500.
Dividend Aristocrats, like other high-quality dividend stocks, can also help reduce volatility in your portfolio. We can see this in a metric called beta, which compares the volatility of a stock or group of stocks against a broader market index like the S&P 500. As a group, Dividend Aristocrats generally have a beta below 1, meaning they are less volatile than the broader market.
If you're looking for a combination of above-average dividend yield, payout growth, and low volatility, S&P Dividends Aristocrats are a great place to start.
When is the Dividend Aristocrats list updated?
The Dividend Aristocrats list is updated at several frequencies by S&P Dow Jones Indices:
- Once each year in January, companies are added and removed based on the eligibility requirements.
- At the beginning of each quarter, the index is reweighted, meaning the size of each constituent is reset so that they all make up an equal percentage of the index.
- On rare occasion, a stock may lose Dividend Aristocrat status. If a company is removed from the S&P 500, acquired, or makes changes to its dividend that keep it from meeting the qualifying criteria, it is dropped from the Dividend Aristocrat index typically no later than the first business day of the following month.
The Dividend Aristocrat index, by its nature, doesn't change much in most years. Four new companies were added in 2019, three in 2018, and two in 2017. Over that three-year period, only one company was removed due to a dividend cut, and another was removed after being acquired (by another Dividend Aristocrat).
2020 has proven a very busy year. So far, the list has increased by nine companies. Seven companies grew into Dividend Aristocrat status by meeting the eligibility requirements, while Otis Worldwide and Carrier were spun out of Raytheon, which replaced United Technologies on the list when the two merged.
More companies tend to lose Dividend Aristocrat status during recessions. In 2009 and 2010, 19 total companies fell off the Dividend Aristocrat index because they cut their dividends following the global financial crisis. It's worth noting that more than half were banks or financial institutions.
What does that inform us, considering that we are in the early stage of the sharpest drop into recession in history? Chances are, some of the current Dividend Aristocrats won't be on the list if the recession is prolonged.
The companies most at risk from this recession are likely to be those in the financial services, oil & gas, or consumer discretionary products sectors. We have seen these industries take the hardest hits so far, and barring a "bounce-back" recovery, the Dividend Aristocrats list is likely to lose members in 2021, if not before the end of 2020.
Is there a Dividend Aristocrats index fund?
In addition to easily capturing the returns of the Dividend Aristocrats, investors in the Dividend Aristocrats ETF also benefit from lower volatility. As a group, Dividend Aristocrats prove much less volatile than the average stock, particularly during stock market downturns and recessions.
Just don't mistake lower volatility for being immune to losses, especially over short periods. Uncertainty, bad news, and a litany of unexpected things can and will cause stocks to fall; the ProShares S&P 500 Aristocrats ETF will surely experience days, weeks, quarters, and even years when it loses value.
But with history as a guide, the high-quality, financially strong companies that make up the index are likely to prove resilient, and investors will tend to return to them quickly. Investors looking for a simple, low-cost way to invest in the entire Dividend Aristocrats universe should give this ETF consideration.
Should you buy individual Dividend Aristocrat stocks?
Yes. Not only does the composition of the rest of your portfolio come into play, but so does your long- and short-term objectives as well as the kinds of companies you want to own.
For instance, if you're looking for immediate income, you may want to avoid the constituents with lower dividend payouts. If long-term growth is your focus, you may be better off buying Dividend Aristocrats with higher growth prospects, even if they have lower dividend payouts.
In a different vein, you may prefer to avoid certain sectors, such as oil stocks or the defense industry. Whether you're looking to pick individual stocks to suit your investing style and goals, or for other reasons such as socially responsible investing goals, Dividend Aristocrats can be an excellent starting point for finding the best-in-class dividend growth stocks.