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 stocks to own.
Dividend Aristocrats list
Here's a full list of the 57 stocks that are Dividend Aristocrats as of December 2019, along with how many years each has increased its dividend:
|Company||Sector||Consecutive Years of Dividend Growth|
|AT&T (NYSE:T)||Communications services||34|
|Abbott Laboratories (NYSE:ABT)||Healthcare||46|
|Air Products & Chemicals (NYSE:APD)||Materials||36|
|A.O. Smith (NYSE:AOS)||Industrials||26|
|Archer Daniels Midland (NYSE:ADM)||Consumer staples||44|
|Automatic Data Processing (NASDAQ:ADP)||Information technology||44|
|Becton, Dickinson & Co. (NYSE:BDX)||Healthcare||47|
|Brown-Forman (B Shares) (NYSE:BF.B)||Consumer staples||34|
|Cardinal Health (NYSE:CAH)||Healthcare||31|
|Cincinnati Financial (NASDAQ:CINF)||Financials||59|
|Clorox (NYSE:CLX)||Consumer staples||42|
|Coca-Cola (NYSE:KO)||Consumer staples||56|
|Colgate-Palmolive (NYSE:CL)||Consumer staples||56|
|Consolidated Edison (NYSE:ED)||Utilities||44|
|Emerson Electric (NYSE:EMR)||Industrials||56|
|Federal Realty Investment Trust (NYSE:FRT)||Real estate||46|
|Franklin Resources (NYSE:BEN)||Financials||37|
|General Dynamics (NYSE:GD)||Industrials||27|
|Genuine Parts (NYSE:GPC)||Consumer discretionary||56|
|Hormel Foods (NYSE:HRL)||Consumer staples||50|
|Illinois Tool Works (NYSE:ITW)||Industrials||47|
|Johnson & Johnson (NYSE:JNJ)||Healthcare||56|
|Kimberly Clark (NYSE:KMB)||Consumer staples||46|
|Leggett & Platt (NYSE:LEG)||Consumer discretionary||47|
|Lowe's (NYSE:LOW)||Consumer discretionary||44|
|McCormick & Co. (NYSE:MKC)||Consumer staples||33|
|McDonald's (NYSE:MCD)||Consumer discretionary||42|
|PPG Industries (NYSE:PPG)||Materials||47|
|People's United Financial (NASDAQ:PBCT)||Financials||25|
|PepsiCo (NASDAQ:PEP)||Consumer staples||46|
|Procter & Gamble (NYSE:PG)||Consumer staples||56|
|Roper Technologies (NYSE:ROP)||Industrials||26|
|S&P Global (NYSE:SPGI)||Financials||45|
|Stanley Black & Decker (NYSE:SWK)||Industrials||51|
|Sysco (NYSE:SYY)||Consumer staples||38|
|T. Rowe Price Group (NASDAQ:TROW)||Financials||32|
|Target (NYSE:TGT)||Consumer discretionary||47|
|United Technologies (NYSE:UTX)||Industrials||25|
|VF Corp. (NYSE:VFC)||Consumer discretionary||46|
|Walgreens Boots Alliance (NASDAQ:WBA)||Consumer staples||43|
|Walmart (NYSE:WMT)||Consumer staples||42|
|W.W. Grainger (NYSE:GWW)||Industrials||47|
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, since only the biggest companies with many years of results and growth can make the cut. They're more likely to remain stalwarts, and are also 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, absolutely. 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.
Data backs this up. From 2009 through 2018, the Dividend Aristocrats Index generated 14.65% in average annualized total returns. Not only is that a solid result, it also beat the 13.44% in average total returns from the S&P 500 over the same period.
That may not seem like much difference, but it adds up over time. Let's say you invested $10,000 in the Dividend Aristocrats Index in 2009, and held your investment through 2018:
This shows the actual year-by-year returns of both the S&P 500 and Dividend Aristocrats Index from 2009 through 2018. Not only would a $10,000 investment have grown to $39,000 during those years, but it would also have generated almost $5,000 more in returns than the S&P 500 over the same period.
Dividend Aristocrats, like other high-quality dividend stocks, can also help reduce volatility in your portfolio. This can be particularly valuable in protecting your asset value during market turmoil, especially downturns, when stock prices can fall sharply.
That's not to say Dividend Aristocrat stocks won't fall during the next market downturn -- they will. However, as a group, they tend to fall less, while also (generally) recovering more quickly. This is often because investors recognize them as safer, high-quality investments worth owning during recessions or economic uncertainty.
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 their 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 sooner. If a company is removed from the S&P 500, is acquired, or makes changes to its dividend that keep it from meeting the qualifying criteria, it's dropped from the Dividend Aristocrat index; this is 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).
However, companies are far more likely to lose Dividend Aristocrat status during big 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, of this number, more than half were banks or financial institutions.
Is there a Dividend Aristocrats index fund?
The ProShares S&P 500 Aristocrats ETF (NYSEMKT:NOBL) is an excellent way for investors to own a low-cost index fund of the full Dividend Aristocrats list, while someone else does all the adding, subtracting, and rebalancing.
In addition to easily capturing the potential returns of the Dividend Aristocrats as a group, investors in the ProShares 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. That should remain the case in the future. 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?
With a low-cost index available, should investors consider just buying some of the Dividend Aristocrats? Yes, absolutely. Not only does the composition of the rest of your portfolio come into play, but also your long-term and short-term objectives.
For instance, if you have time and energy to do your own research, you might more easily reach your specific goals by only buying certain Dividend Aristocrats. For instance, if you're looking for income now, you may want to avoid the constituents with lower dividend yields. If long-term growth is your focus, you may be better off buying the lower-yield stocks with higher growth prospects.
Dividend Aristocrats can be an excellent set of stocks to buy as a single bucket, but they're also a great starting point for building out part of your portfolio. How to best use them depends on your goals, as well as your willingness and ability to pick individual investments on your own.