The Dividend Aristocrats in 2021
Legendary investor George Soros once said, “Good investing should be boring”. But an increase in volatile themes today suggests this maxim has gone ignored by at least some market participants.
From a high level, we can view investments on a spectrum. Volatile assets like cryptocurrencies and SPACs are more on the exciting side of things. The boring side is likely where Dividend Aristocrat stocks lie.
The data above, from Sure Dividend, looks at all 65 Dividend Aristocrats, ranking them by their yield, sector, and years of growth.
What are Dividend Aristocrats?
The U.S. Dividend Aristocrats are a basket of 65 stocks in the S&P 500 index. These companies have been growing their dividend per share consecutively, for a minimum of 25 years.
This is easier said than done, since companies often distribute dividends quarterly. To pay and grow a dividend in the long run implies a business model that can withstand varying economic environments, including setbacks like market crashes.
Though dividend stocks may not carry the same excitement as other investments, studies show that dividends represent over 50% of total S&P 500 market returns.
| Company | Dividend Yield | Years Dividend Grown | Sector |
|---|---|---|---|
| AT&T, Inc. | 6.9% | 36 | Communication Services |
| Exxon Mobil Corp. | 6.1% | 38 | Energy |
| Chevron Corp. | 5.1% | 33 | Energy |
| International Business Machines Corp. | 4.9% | 25 | Technology |
| Abbvie Inc | 4.8% | 49 | Healthcare |
| Realty Income Corp. | 4.2% | 26 | Real Estate |
| People`s United Financial Inc | 4.1% | 28 | Financial Services |
| Federal Realty Investment Trust | 4.0% | 53 | Real Estate |
| Consolidated Edison, Inc. | 4.0% | 47 | Utilities |
| Amcor Plc | 3.9% | 36 | Consumer Cyclical |
| Franklin Resources, Inc. | 3.7% | 41 | Financial Services |
| Walgreens Boots Alliance Inc | 3.5% | 45 | Healthcare |
| Leggett & Platt, Inc. | 3.3% | 47 | Consumer Cyclical |
| Kimberly-Clark Corp. | 3.3% | 49 | Consumer Defensive |
| Cardinal Health, Inc. | 3.2% | 33 | Healthcare |
| Coca-Cola Co | 3.1% | 58 | Consumer Defensive |
| PepsiCo Inc | 3.0% | 49 | Consumer Defensive |
| 3M Co. | 3.0% | 62 | Industrials |
| Essex Property Trust, Inc. | 2.9% | 26 | Real Estate |
| Genuine Parts Co. | 2.7% | 65 | Consumer Cyclical |
| General Dynamics Corp. | 2.6% | 28 | Industrials |
| Procter & Gamble Co. | 2.5% | 64 | Consumer Defensive |
| Johnson & Johnson | 2.5% | 58 | Healthcare |
| Archer Daniels Midland Co. | 2.5% | 46 | Consumer Defensive |
| Aflac Inc. | 2.5% | 39 | Financial Services |
| Atmos Energy Corp. | 2.5% | 37 | Utilities |
| Cincinnati Financial Corp. | 2.4% | 60 | Financial Services |
| Clorox Co. | 2.3% | 43 | Consumer Defensive |
| VF Corp. | 2.3% | 48 | Consumer Cyclical |
| Sysco Corp. | 2.2% | 51 | Consumer Defensive |
| Colgate-Palmolive Co. | 2.2% | 57 | Consumer Defensive |
| McDonald`s Corp | 2.2% | 45 | Consumer Cyclical |
| Emerson Electric Co. | 2.2% | 64 | Industrials |
| Hormel Foods Corp. | 2.1% | 55 | Consumer Defensive |
| Air Products & Chemicals Inc. | 2.1% | 39 | Basic Materials |
| Nucor Corp. | 2.0% | 47 | Basic Materials |
| Illinois Tool Works, Inc. | 2.0% | 46 | Industrials |
| T. Rowe Price Group Inc. | 2.0% | 34 | Financial Services |
| Chubb Limited | 2.0% | 27 | Financial Services |
| Automatic Data Processing Inc. | 1.9% | 46 | Industrials |
| NextEra Energy Inc | 1.9% | 25 | Utilities |
| Medtronic Plc | 1.8% | 43 | Healthcare |
| Caterpillar Inc. | 1.8% | 26 | Industrials |
| Walmart Inc | 1.6% | 48 | Consumer Defensive |
| McCormick & Co., Inc. | 1.5% | 34 | Consumer Defensive |
| A.O. Smith Corp. | 1.5% | 27 | Industrials |
| W.W. Grainger Inc. | 1.5% | 49 | Industrials |
| Linde Plc | 1.5% | 28 | Basic Materials |
| Abbott Laboratories | 1.4% | 49 | Healthcare |
| Dover Corp. | 1.4% | 65 | Industrials |
| Stanley Black & Decker Inc | 1.4% | 53 | Industrials |
| Target Corp | 1.3% | 53 | Consumer Defensive |
| PPG Industries, Inc. | 1.3% | 49 | Basic Materials |
| Becton, Dickinson And Co. | 1.3% | 49 | Healthcare |
| Pentair plc | 1.3% | 44 | Industrials |
| Lowe`s Cos., Inc. | 1.2% | 57 | Consumer Cyclical |
| Albemarle Corp. | 1.0% | 26 | Basic Materials |
| Brown-Forman Corp. | 1.0% | 31 | Consumer Defensive |
| Expeditors International Of Washington, Inc. | 1.0% | 26 | Industrials |
| Ecolab, Inc. | 0.9% | 35 | Basic Materials |
| Cintas Corporation | 0.9% | 38 | Industrials |
| Sherwin-Williams Co. | 0.8% | 42 | Basic Materials |
| S&P Global Inc | 0.8% | 48 | Financial Services |
| Roper Technologies Inc | 0.5% | 28 | Industrials |
| West Pharmaceutical Services, Inc. | 0.2% | 27 | Healthcare |
Numerous companies on this list have brand value that stretches all over the globe—including the likes of McDonald’s, Coca-Cola, and Walmart.
Vast global recognition and branding power is in part why these companies can generate cash flows to pay dividends for decades on end. For instance, 94% of the world population recognizes Coca-Cola’s logo.
Zooming In
The 65 Dividend Aristocrat stocks break down into 11 sectors. Across sectors, Industrials is the most crowded, consisting of 14 companies, with an average yield of 1.6% and a dividend growth duration of 43 years. Popular stocks in this sector include 3M and Caterpillar.
Next is the Consumer Defensive sector, containing 13 companies like Clorox, Target, Pepsi, and Procter & Gamble. The average yield is 2.2%, with an average growing duration of 49 years.
The highest yield by sector belongs to Energy, at 5.5%, but is only made up of only Chevron and Exxon Mobil. Their dividend track record may falter in the years to come, due to transitions away from the oil business. Just last year, Big Oil firms reported record net income losses, and Exxon was booted from the Dow Jones Industrial Average (DJIA).
The Consumer Cyclical sector has been increasing their dividend for an average of 50 years, the longest of any sector. Lowe’s and McDonald’s are involved in this category.
Businesses for Today and Tomorrow
Although the Dividend Aristocrats list is published every year, the companies on the list are a stable bunch, meaning changes are fairly infrequent.
In a market climate in part shaped by low rates and compressed yields in the fixed income space, Dividend Aristocrats might be a particularly attractive alternative for investors with a longer-term outlook.
