By definition, to be a Dividend Aristocrat, a company must be a member of the S&P 500 index and have a minimum of one dividend increase annually for at least the last 25 consecutive years.
Facts about the Dividend Aristocrats
The first list of Dividend Aristocrats was published in 1989, with 26 companies on that inaugural list. The list peaked in 2001, with 64 companies qualifying as Dividend Aristocrats.
The longest dividend growth streak of any Dividend Aristocrat belongs to American States Water (NYSE: AWR), which has hiked dividends annually since 1956. This California-based water utility also provides water to military bases on 50-year contracts. The company is incredibly stable and has been for a very long time.
The number of companies on the list tends to coincide with historically significant bear markets. For example, the initial list of just 26 companies was published 25 years after the down years of 1973-1974. That tough economy very likely forced many companies to freeze or drop their dividends, disqualifying them from the original list 25 years later. Likewise, the list peaked in 2001 at 64 and again at 60 in 2008. The recessions that immediately followed those peaks once again forced numerous Dividend Aristocrats off the list.
Here's up-to-date information on the current Dividend Aristocrats, including a sector breakdown and recent performance, from Dow Jones.
More than just a growing dividend
Not just any company is capable of increasing its dividend for 25-plus years. The sustained success required is, almost by definition, next to impossible. Only around 10% of the S&P 500 qualify today, after all. To achieve such a feat, a company must be consistent and resilient and have strong competitive advantages and excellent capital allocation. That combination of factors leads to strong fundamental performance first. The dividend strength is a reflection of those fundamentals, not the other way around.
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