Friday, December 4, 2015

Dividend Aristocrats

The Standard & Poor's Dividend Aristocrats Index is made up of companies that have raised their payouts for at least 25 years in a row and are members of the S&P 500.  Some have paid dividends for more than 100 years!
  • In 2015, there were 53 companies in the Aristocrats list, though a recent buyout reduced it to 52.
  • Launched in 2005, Standard & Poor's developed the S&P Dividend Aristocrats Index as a way to mimic an investment strategy that a handful of sophisticated dividend investors had been employing successfully for decades. (Note: Rather confusingly, this index is different from the "S&P High Yield Dividend Aristocrats Index," which is a less-exclusive group.)
  • The Dividend Aristocrat strategy is based on the premise that buying large-cap stocks with decades-long track records of increased payouts will deliver investors total returns that exceed those of just "buying the market" with a traditional market-cap-weighted S&P 500 Index fund.
  • In 2014, the S&P 500 Dividend Aristocrat Index posted a total return of 15.54%. By way of comparison, the S&P 500 Index has delivered investors a total return of 13.46% — a gap of more than 2%.
  • The exchange-traded fund SPDR S&P Dividend (SDY) tracks the S&P High Yield Dividend Aristocrats Index. The fund is a competitor to the popular iShares Select Dividend (DVY) which tracks the Dow Jones U.S. Select Dividend Index. The ProShares S&P 500® Dividend Aristocrats ETF (NOBL) is tracking the S&P 500 dividend aristocrats since 10/9/13.
  • During the 2008-09 bear market, 32 companies in the S&P 500 eliminated their dividend. Another 108 cut the payout.
December 2015


Which Dividend Aristocrat stocks posted the biggest price gains for 2015 through Nov. 20?

  • No. 1: Hormel Foods (NYSE:HRL) rose 30%. The dividend yield is 1.5%. Possible reason for price gains: After two years of single-digit earnings increases, EPS growth stepped up to 14% in 2014 and is expected to come in at 17% this year.
  • No. 2: Chubb (NYSE:CB) gained 25%. The dividend yield is 1.8%. Possible reason for price gains: a strong industry group. The Insurance Property Casualty Title group began the year as No. 62 of 197 industry groups. As of mid-November, the group was No. 14.
  • No. 3: Brown Forman (NYSE:BFB) advanced 20%. The yield is 1.2%. Possible reason for price gains: industry conditions. American whiskeys are seeing growing demand globally. Also, the Trade Promotion Authority law, signed by President Obama on June 29, opens more markets to whiskey.
  • No. 4: McDonald's (NYSE:MCD) is up 18%. The dividend yield is 3.2%. Possible reason for price gains: signs of a turnaround. EPS in Q3 jumped 28%, the best in at least 19 quarters. Same-store sales rose in the U.S. for the first time in two years.
  • No. 5: Clorox (NYSE:CLX) rose 17%. The yield is 2.5%. Possible reason for price gains: Earnings inched up just 1% to 3% in the past four fiscal years. But the Street sees a 9% rise in fiscal 2016 ending in June, which would be the best in seven years.


** Full list **

In 2015, Family Dollar Stores (FDO) was removed from the list due to its purchase by Dollar Tree.

The full list of 53 companies follows:
  1. 3M Company (MMM)
  2. AFLAC Inc. (AFL)
  3. AbbVie Inc. – (ABBV)
  4. Abbott Laboratories (ABT)
  5. Air Products & Chemicals Inc (APD)
  6. Archer-Daniels-Midland Co (ADM)
  7. AT&T (T)
  8. Automatic Data Processing (ADP)
  9. Bard, C.R. Inc (BCR)
  10. Becton, Dickinson & Co (BDX)
  11. Bemis Co Inc (BMS)
  12. Brown-Forman Corp B (BF/B)
  13. Cardinal Health Inc. – (CAH)
  14. Chubb Corp (CB)
  15. Chevron Corp. – (CVX)
  16. Cincinnati Financial Corp (CINF)
  17. Cintas Corp (CTAS)
  18. Clorox Co (CLX)
  19. Coca-Cola Co (KO)
  20. Colgate-Palmolive (CL)
  21. Consolidated Edison Inc (ED)
  22. Dover Corp (DOV)
  23. Ecolab Inc (ECL)
  24. Emerson Electric Co (EMR)
  25. Exxon Mobil Corp (XOM)
  26. Franklin Resources (BEN)
  27. Genuine Parts (GPC)
  28. Grainger, W.W. Inc (GWW)
  29. HCP (HCP)
  30. Hormel Foods Corp (HRL)
  31. Illinois Tool Works (ITW)
  32. Johnson & Johnson (JNJ)
  33. Kimberly-Clark (KMB)
  34. Leggett & Platt (LEG)
  35. Lowe’s Cos Inc (LOW)
  36. McCormick & Co (MKC)
  37. McDonald’s Corp (MCD)
  38. McGraw-Hill Cos Inc (MHFI)
  39. Medtronic (MDT)
  40. Nucor (NUE)
  41. PPG Industries Inc (PPG)
  42. PepsiCo Inc (PEP)
  43. Pentair Ltd. (PNR)
  44. Procter & Gamble (PG)
  45. Sherwin-Williams Co (SHW)
  46. Sigma-Aldrich Corp (SIAL) – acquired by Merck KGaA for $17.0 billion in September 2014.
  47. Stanley Black & Decker Inc. (SWK)
  48. Sysco (SYY)
  49. T. Rowe Price (TROW)
  50. Target Corporation (TGT)
  51. VF Corporation (VFC)
  52. Walmart (WMT)
  53. Walgreen Company (WBA)

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