The Dividend Aristocrats list contains companies in the S&P 500 Index that have increased dividends every year for the last 25 straight years. Dividend Aristocrats are large cap, blue chip companies from many different industries, but they have all demonstrated a healthy balance between capital growth and dividend income.
Why do investors care so much about Dividend Aristocrats? Not surprisingly, stocks that have been able to increase their dividends for such a long period of time often have very durable businesses, have exhibited earnings growth, and have done quite well compared to the market.
Performance of the Dividend Aristocrats List
As seen below, the S&P Dividend Aristocrats Index has nicely outpaced the S&P 500 over the past decade. According to S&P, Dividend Aristocrats generated an annualized return of 10.2% over the past 10 years, easily topping the market’s 7.2% rate. Over this period, dividends accounted for 31% of the market’s total return, highlighting their importance in determining total shareholder return.
Blue chip dividend stocks are often characterized by outperformance during down markets. The following chart displays annual returns for Dividend Aristocrats alongside annual returns for the S&P 500. As you can see, dividend aristocrats fell about 22% in 2008 but significantly preserved shareholders’ capital when compared to the S&P 500’s 37% plunge.
Impressively, dividend aristocrats more than kept pace with the market in the years following the financial crisis. Outperforming in down markets and keeping up in up markets results in attractive risk-adjusted returns. Dividend aristocrats have a 13.8% standard deviation over the last 10 years, demonstrating lower volatility than the S&P 500, which recorded a 14.9% standard deviation over the same period.
Sector Mix of the Dividend Aristocrats List
The S&P Dividend Aristocrats Index currently contains 51 stocks with each equally-weighted. As you can see below, the consumer staples sector accounts for about 25% of the index. This is not surprising given the stability of most consumer staples markets. Information Technology is on the other end of the spectrum at less than 2% of the S&P Dividend Aristocrats Index. The rapid pace of change and continuous need to invest for growth make consistent dividend payouts less common.
Compared to the S&P 500, you can see that the Dividend Aristocrats Index is most overweight consumer staples, materials, and industrials. Information technology is the largest underweight, following the cyclical energy sector and financials, which were hit hard during the 2008-09 recession.
You can view all dividend aristocrats in the table below. Data is updated daily, and you can view complete dividend and fundamental information for any stock by clicking on the blue-colored ticker symbol found in the first column.
The biggest challenge with the Dividend Aristocrats list is that each stock must be a member of the S&P 500 Index, cutting out many other high quality dividend growth stocks. Over 150 dividend stocks have increased their dividend for at least 20 consecutive years, significantly more than the 50 Dividend Aristocrats. You can find and filter a table containing all of these dividend growth stocks here.