2021
Dividend
Aristocrats
List
ALL 65 STOCKS
Income investors often turn to bonds for yield, but with interest rates so low for so long, the stock market can sometimes be a better option, with many stocks offering better payoffs than a 10-year Treasury, which pays less than 2%.
Just the two requirements that a stock must be a member of the vaunted S&P 500 (.SPX) and that it has a record of 25 years' worth of dividend increases alone are stringent enough screens to guarantee investors are looking at a list of strong, reliable companies.
But dividend yields themselves don't mean much if they aren't sustainable. That's why being a member of the dividend aristocrats is such a distinction: There are 65 members of the S&P 500 that haven't just paid dividends for at least 25 consecutive years – they've raised their dividends for a minimum of 25 straight years.
But the requirements go even further, with the following attributes also mandatory for membership on the dividend aristocrats list:
Companies must be worth at least $3 billion at the time of each quarterly S&P 500 rebalancing.
Average daily volume of at least $5 million in transactions for every trailing three-month period at every quarterly rebalancing date.
The rebalancing of the index happens every January, April, July and October. New entrants are added and old ones removed once a year.
It's important to keep in mind the goal of the index when looking it over: It's constructed to be a well-diversified, lower-volatility group of stocks boasting both dividend income and capital appreciation potential.
S&P Dow Jones Indices, the index owner, notes that almost one-third of total equity market returns since 1926 have come from dividends and that its selection criteria and diversification requirements make the dividend aristocrat stocks uniquely positioned to do well as a group.
On the issue of diversification, the index has a minimum floor on membership at 40 companies – a level in no danger of being breached anytime soon, given that the current group consists of 65 stocks.
The index also caps the weighting of any single sector at 30%, limiting the impact of any single sector's hit on the broader portfolio.
To that end, while investors could certainly try to adopt their own "smart beta" strategies to eliminate the less alluring members of the group, it's a much lower-effort endeavor to simply buy the entire group as a whole, which is possible due to the existence of dividend aristocrats exchange-traded funds, or ETFs, that track the portfolio.
The ProShares S&P 500 Dividend Aristocrats ETF (NOBL) is the premier exchange-traded fund in the space, with more than $8 billion in assets under management and a reasonable expense ratio of 0.35%.
and how long each has been increasing its payouts to shareholders. The list is current through October 2021.
Here's a full list of all 65 S&P 500 dividend aristocrats
Here's a full list of all 65 S&P 500 dividend aristocrats
COMPANY
SECTOR
YEARS OF DIVIDEND GROWTH
DIVIDEND YIELD
(AS OF OCT. 29)
3M Co. (MMM)
Industrials
63
3.3%
A.O. Smith Co. (AOS)
Industrials
28
1.5%
Abbott Laboratories (ABT)
Health care
49
1.4%
AbbVie Inc. (ABBV)
Health
care
49
4.5%
Aflac Inc. (AFL)
Financials
38
2.5%
Air Products and Chemicals Inc. (APD)
Materials
39
2.0%
Albemarle Corp. (ALB)
Materials
27
0.6%
Amcor PLC (AMCR)
Materials
38
3.9%
Archer-Daniels-Midland Co. (ADM)
Consumer staples
47
2.3%
AT&T Inc. (T)
Communications services
36
8.2%
Atmos Energy Corp. (ATO)
Utilities
34
2.7%
Automatic Data Processing Inc. (ADP)
Information technology
46
1.7%
Becton, Dickinson & Co. (BDX)
Health
care
49
1.4%
Brown-Forman Corp. (BF-B)
Consumer
staples
37
1.1%
Cardinal Health Inc. (CAH)
Health care
34
4.1%
Caterpillar Inc. (CAT)
Industrials
27
2.2%
Chevron Corp. (CVX)
Energy
34
4.7%
Chubb Ltd. (CB)
Financials
28
1.6%
Cincinnati Financial Corp. (CINF)
Financials
61
2.1%
Cintas Corp. (CTAS)
Industrials
37
0.9%
The Clorox Co. (CLX)
Consumer staples
45
2.9%
The Coca-Cola Co. (KO)
Consumer staples
59
3.0%
Colgate-Palmolive Co. (CL)
Consumer staples
59
2.4%
Consolidated Edison Inc. (ED)
Utilities
47
4.1%
Dover Corp. (DOV)
Industrials
65
1.2%
Ecolab Inc. (ECL)
Materials
29
0.9%
Emerson Electric Co. (EMR)
Industrials
59
2.1%
Essex Property Trust Inc. (ESS)
Real estate
27
2.5%
Expeditors International of Washington Inc. (EXPD)
Industrials
27
0.9%
ExxonMobil Corp. (XOM)
Energy
37
5.5%
Federal Realty Investment Trust (FRT)
Materials
49
3.6%
Franklin Resources Inc. (BEN)
Financials
40
3.6%
General Dynamics Corp. (GD)
Industrials
30
2.3%
Genuine Parts Co. (GPC)
Consumer discretionary
65
2.4%
Hormel Foods Corp. (HRL)
Consumer staples
55
2.3%
International Business Machines Corp. (IBM)
Information technology
25
5.2%
Johnson & Johnson (JNJ)
Health
care
59
2.6%
Kimberly-Clark Corp. (KMB)
Consumer
staples
48
3.5%
Leggett & Platt Inc. (LEG)
Consumer discretionary
50
3.6%
Linde PLC (LIN)
Materials
28
1.3%
Lowe's Companies Inc. (LOW)
Consumer discretionary
47
1.4%
McCormick & Co. (MKC)
Consumer staples
35
1.7%
McDonald's Corp. (MCD)
Consumer discretionary
44
2.3%
Medtronic PLC (MDT)
Health care
43
2.1%
NextEra Energy Inc. (NEE)
Utilities
25
1.8%
Nucor Corp. (NUE)
Materials
48
1.5%
Pentair PLC (PNR)
Industrials
44
1.1%
People's United Financial Inc. (PBCT)
Financials
28
4.3%
Illinois Tool Works Inc. (ITW)
Industrials
50
2.1%
PepsiCo Inc. (PEP)
Consumer staples
48
2.7%
PPG Industries Inc. (PPG)
Materials
49
1.5%
The Procter & Gamble Co. (PG)
Consumer staples
65
2.4%
Realty Income Corp. (O)
Real estate
26
4.0%
Roper Technologies Inc. (ROP)
Industrials
28
0.5%
S&P Global Inc. (SPGI)
Financials
48
0.7%
Sherwin-Williams Co. (SHW)
Materials
42
0.7%
Stanley Black & Decker Inc. (SWK)
Industrials
53
1.8%
Sysco Corp. (SYY)
Consumer staples
41
2.4%
T. Rowe Price Group Inc. (TROW)
Financials
35
2.0%
Target Corp. (TGT)
Consumer discretionary
49
1.4%
VF Corp. (VFC)
Consumer discretionary
49
2.7%
W.W. Grainger Inc. (GWW)
Industrials
50
1.4%
Walgreens Boots Alliance Inc. (WBA)
Consumer staples
45
4.1%
Walmart Inc. (WMT)
Consumer staples
48
1.5%
West Pharmaceutical Services Inc. (WST)
Health care
28
0.2%
Invest in good businesses with low capital needs
IBM. The old-school tech giant clocked its 25th straight year of dividend increases last year, making Big Blue a proud new member of the elite club. Although things have been slowly improving for IBM shareholders over the last year, some critics actually fault IBM for focusing more on dividends than long-term, bold investments in innovation. IBM has been an extremely underwhelming performer for more than a decade, with shares having gained no ground since 2010.
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1. Alteryx (AYX)
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2. Salesforce.com (CRM)
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Recent Additions and Subtractions
Although the total number of dividend aristocrats remained stagnant at 65 between 2020 and 2021, there are actually three new members of the index over the last year or so and three stocks that were removed.
Here are the three newest dividend aristocrats:
NextEra Energy. Electric utility NextEra Energy is also a new member of the list as of 2021, having clocked 25 straight years of dividend growth. Unlike IBM, this has come alongside impressive long-term share performance, and the company has some of the most impressive clean energy operations among large U.S. companies, known for its growing focus on wind and solar.
2
West Pharmaceutical Services. Although this medical supplies company has actually clocked 28 straight years of dividend growth, WST is new to the S&P dividend aristocrats merely because it only joined the S&P 500 in 2020. That can happen when you grow as quickly as West Pharmaceutical Services. As recently as 2012, shares were trading for less than $20; the stock recently hit all-time highs around $475.
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here are the three stocks making their way out of the index:
And because all things must come to an end,
Invest in good businesses with low capital needs
Property insurance is already on financial adviser Buz Livingston's radar screen for personal and professional reasons. He lives
in Santa Rosa Beach, Fla.,
where homeowners insurance is more expensive and harder to come by.
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1. Alteryx (AYX)
Many of the larger carriers have left the state, and regulators have forbidden some smaller insurers from signing on new business because they can't absorb the risk, he says. Meanwhile, deductibles and premiums continue to rise.
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2. Salesforce.com (CRM)
My homeowners insurance 20 years ago was less than $1,000 a year and now it's $4,000," he says. "We've never had any claims, but the premiums go up regardless because of claims in other parts of the state."
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2. Salesforce.com (CRM)
For his clients' retirement plans, he recently began factoring in a higher annual inflation rate — starting at 5% — just for insurance.
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Carrier Global Corp. (CARR). It's no coincidence that these three particular companies just lost their status as dividend aristocrats: They're all the result of a 2020 merger between United Technologies and Raytheon that created the newly formed aerospace and defense giant Raytheon Technologies.
Heating, air conditioning and refrigeration company Carrier Global was spun off from United Technologies in preparation for the merger and began trading as a stand-alone stock in 2020.
Otis Worldwide Corp. (OTIS). Elevator and escalator giant Otis was in an identical situation last year, spinning off into its own corporate entity to help make the Raytheon-United Technologies merger more amenable to regulators.
Although the new company still pays a dividend, it's no dividend aristocrat.
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Raytheon Technologies Corp. (RTX). The newly formed defense and aerospace giant Raytheon Technologies will enjoy other benefits from its business combination in the form of increased market share and will make the segment more competitive with the likes of Boeing (BA) in the commercial aerospace field. Alas, RTX still pays a dividend and may remain a sound investment, but it's no longer a dividend aristocrat.
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Notable mention: AT&T. Although technically a member of the illustrious dividend aristocrats list – and an impressive one at that, with a list-leading 8.2% dividend yield – the telecom and media giant is almost certain to forfeit its spot on this list in 2022. That's because of its decision to spin off the WarnerMedia division, which will reduce its free cash flow and simultaneously see AT&T cut its dividend payout ratio. The only way AT&T doesn't drop from the list is is if the transaction fails to go through or the company dramatically alters its stated dividend policy post-spin.
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