What is Dividend Aristocrats?
A company is known to be to dividend aristocrats if it has not only paid dividends to its stockholders consistently but also increased its payout of the dividend year by year for at least 25 consecutive years.
Companies that have robust financial health and enough surplus over the years may pay dividends to their stockholders year by year. Those companies which can cope up with the competition and move their business forward towards growth and profitability perhaps can increase the dividend payoutDividend PayoutThe dividend payout ratio is the ratio between the total amount of dividends paid (preferred and normal dividend) to the company's net income. Formula = Dividends/Net Incomeread more in the coming years.
Thus, dividend aristocrat companies are those with a stable business and surplus funds. They can pay their stockholders’ dividends continuously and simultaneously increase the payout of dividends every year.
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Source: Dividend Aristocrats (wallstreetmojo.com)
List of Dividend Aristocrat Companies
Stocks of a total of 57 companies have been included in the S&P index of the US in the year 2019. The list of this dividend aristocrats is as below:
- Genuine Parts Co.
- Emerson Electric
- Dover Corp.
- Cincinnati Financial
- Procter & Gamble Co.
- Coca-Cola Company
- 3M Company
- Johnson & Johnson
- Federal Realty Investment Trust
- Colgate Palmolive Co.
- Stanley Black & Decker
- Hormel Foods Corp.
- Target Corp.
- W. Grainger Inc.
- Sysco Corp.
- PPG Industries Inc.
- Kimberly Clark Corp.
- Becton Dickinson & Co.
- Leggett & Platt Inc.
- PepsiCo Inc.
- S&P Global Inc.
- Nucor Corp.
- VF Corp.
- Consolidated Edison
- Wal-Mart Inc.
- Illinois Tool Works
- Automatic Data Processing
- Archer Daniels Midland
- Walgreens Boots Alliance Inc.
- Clorox Company
- Pentair Ltd
- McDonald’s Corp.
- Medtronic Plc
- Franklin Resources
- Sherwin Williams Co.
- AFLAC Inc.
- Cintas Corp.
- ExxonMobil Corp.
- Air Products & Chem.
- United Technologies
- O. Smith Corp.
- Linde Plc
- Roper Technologies Inc.
- Chubb Limited
- People’s United Financial
- Caterpillar Inc.
- Ecolab Inc.
- General Dynamics
- Rowe Price Group
- Chevron Corp.
- Brown-Forman Class B
- AT&T Inc.
- McCormick & Co.
- Abbott Laboratories
- AbbVie
- Cardinal Health
- Lowe’s
Examples of Dividend Aristocrats
Given is are the examples of dividend aristocrats companies.
Example #1
A company has been paying a dividend to its shareholders every year for a continuous period of 26 years. However, the payout rate keeps on increasing or decreasing based on the availability of funds with the company.
In this example, the company cannot be said to be a dividend aristocrat since the rate of payout of dividends is not increasing consistently.
Example #2
A company has been regular in paying dividends to its stockholders for the last 28 years. In addition to this, the company increases the rate of dividend payout each year.
In this example, a company is a dividend aristocrat company.
Importance
The investors invest in the stock of the company, in anticipation of dividends. Strong dividend payouts increase the value of an investor’s portfolio over some time. Having stocks of such companies in your portfolio for the long term will turn out to be a good investment strategy.
In uncertain markets, stocks of dividend aristocrat companies prove to be a better investment option with growing dividend payouts. Stocks of such companies are less risky and provide good returns. Also, such companies perform better than others with high growth rates even in challenging economic situations and provide their investors with increased dividends, which gives the investors stability during such economic conditions. Not to forget that the dividends which the investors receive can be invested back by them into the shares again to obtain more results.
Conclusion
An investor can identify dividend aristocrats by studying the dividend payout history of a company and also the rate of increase in the payout each year. Investment into stocks of such companies will protect the investor from uncertainties of the stock marketStock MarketStock Market works on the basic principle of matching supply and demand through an auction process where investors are willing to pay a certain amount for an asset, and they are willing to sell off something they have at a specific price.read more as these companies are generally healthy and are capable of overcoming uncertain market situations.
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This article has been a guide to dividend aristocrats. Here we discuss the list of dividend aristocrats companies along with the examples and its importance. You may also have a look at the following articles –
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