S&P 500 Dividend Aristocrats Stocks List

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S&P 500 Dividend Aristocrats

The Dividend Aristocrats are S&P 500 index constituents that have increased their dividend payouts for 25 consecutive years or more.
The S&P 500 Dividend Aristocrat index was launched by Standard and Poors in May 2005, and has historically outperformed the S&P 500 index with lower volatility over longer investment time frames. For example, over the past 10 years through the period ending December 31, 2018, the S&P 500 Dividend Aristocrat index has returned 14.63% on an average annual basis, compared to the S&P 500 index which has returned only 13.12% annually during that same period. The risk factor commonly called the standard deviation of the S&P 500 during this same 10 year period was 13.60% while the Dividend Aristocrat risk factor or standard deviation was 13.28% or 2.41% lower than the S&P 500. Standard deviation measures investment risk as a range in percentage terms within a selected probability called in statistical terms a confidence level. The investment return would then fall within a range that is plus or minus around the mean investment return and would be typically within a bell shaped curve. The higher the standard deviation or the wider the plus and minus range of investment returns combined from that mean investment return, the greater the risk of the investment since it has the potential to be farther away from the projected mean return.
The S&P 500 Dividend Aristocrat index long term track record showcases the long-term positive effect of compounding dividends as well as the positive effect of a rising dividend payout on a portfolio's total return over multi-year periods. To reiterate, as demonstrated over the past ten years on an average annual basis, the S&P 500 Dividend Aristocrat index has returned approximately 1.5% more annually than the S&P 500 index with approximately 2.5% lower standard deviation or risk.
The companies that comprise the Dividend Aristocrats span all eleven sectors within the S&P 500 index and therefore encompass both large cap growth and large cap value companies. This composition contrasts sharply with most other dividend-yield based indices, which tend to be more value-oriented in their holdings and are more heavily weighted toward financial, energy, telecommunication and utility stocks. The S&P 500 Dividend Aristocrat index has traditionall had a large cap value investor audience that favored blue chip dividend stocks. However, many large cap growth investors also now view the S&P 500 Dividend Aristocrat index very positively as they seek companies that possess a combination of both capital appreciation and a consistent and increasing dividend payout.
The increased popularity of “Dividend Growth” investing in recent years has greatly elevated the profile of the S&P 500 Dividend Aristocrat index in the eyes of the investing public. Dividend Growth investing involves investing in companies that are generating robust free cash flow. Free cash flow is defined as a companies' operating cash flow minus capital expenditures. The significance of strong free cash flow is that it then allows a companies' management the flexibility to pay a higher dividend growth rate. Since 1990, the average or mean annual dividend growth rate for the S&P 500 index has been 5.98 % through December 31, 2018. The absolute percentage level of dividends in a dividend growth strategy is less paramount, as there are many attractive dividend growth stocks that yield only a 1% to 2% annual dividend rate. What the investor is seeking in this type of strategy is a higher and accelerating rate of an annual percentage of the dividend increase. Most dividend growth investors seek dividend payouts that increase at a 10% or more rate annually. S&P Capital IQ rates these large cap individual companies based on the growth and stability of their earnings and dividends. In rating the company, they utilize a quality letter scale of A plus to D. What is considered "high quality" on this scale are those companies that are rated A plus, A, A minus and B plus. The typical dividend growth stock is rated B plus or higher, for the reason that a company has to be generating a significant amount of free cash flow in order to pay an increasing dividend annually. These dividend growth companies therefore tend to be more mature companies in nature and do not include many of today's widely held newer companies such as the “FANG” stocks.
To be eligible for the S&P 500 Dividend Aristocrat index, a stock must have increased their dividend payouts for a minimum of 25 consecutive years or more, must currently be part of the S&P 500 index and finally must have a minimum market capitalization of $3 billion. A committee at S&P Global makes the final decision on which companies are included in the S&P 500 index and this then allows for eligibility for inclusion into the Dividend Aristocrat index. Should a company reduce their dividend or be dropped from the S&P 500 index, the holding is automatically dropped from the Dividend Aristocrat list as well. The S&P 500 Dividend Aristocrat index has historically consisted of approximately 50 large cap companies with most of the stocks in this index rating B plus or higher on the quality scale. What stands out immediately upon review of the Dividend Aristocrat index is that unlike the S&P 500 index, there is a relatively small amount of technology holdings in the S&P 500 Dividend Aristocrat index.
Since the 2008 financial crisis, the S&P 500 Dividend Aristocrat list has evolved as follows:
2009 - The list declined from 52 companies in 2008 to 43 companies in 2009, as nine companies cut their dividend payouts due to the 2008 financial crisis. They were: Anheuser Busch (BUD), Bank of America (BAC) , Comerica (CMA), Fifth Third Bank (FITB), Keycorp (KEY), Progressive Corp (PGR), Regions Financial (RF), Synovus Financial (SNV), and Wm. Wrigley (WW), which was acquired by Mars.
Also in 2009, there were two additions - Bemis (BMS) and Leggett & Platt (LEG).
2010 - A second round of ten companies were dropped: Avery Dennison (AVY), BB&T , Gannett (GCI), General Electric (GE), Johnson Controls (JCI), Legg Mason (LM), M&T Bank (MTB), Pfizer (PFE), State Street Bank (STT), and US Bancorp (USB).
Also in 2010, Brown Forman (BF.B) was added.
2011 - Three companies were added, Ecolab (ECL), Hormel Foods (HRL), and McCormick (MKC).
2012 - CenturyLink (CTL) was removed from the index after reducing its dividend from 72.5 to 54 cents per share per quarter.
In addition in 2012, nine new companies were added to the index as follows:

AT&T (T)
Colgate-Palmolive (CL)
Franklin Resources (BEN)
Genuine Parts (GPC)
Health Care Property Investors (HCP)
Illinois Tool Works (ITW)
Medtronic (MDT)
Sysco (SYY)
T. Rowe Price (TROW)2013 - Pitney Bowes (PBI) was removed after slashing the dividend from 37.5c to 18.75c per quarter per share.
2014 - Bemis (BMS) was removed from the S&P 500 index and therefore dropped from the S&P 500 Dividend Aristocrat list.
2015 - Family Dollar Stores (FDO) was removed from the list due to its purchase by Dollar Tree. Also in 2015, Sigma-Aldrich Corp (SIAL) was removed from the list due to its acquisition by Merck.2016 - Chubb Corp (CB) was removed upon acquisition by ACE Limited (ACE).2017- General Dynamics (GD) and the REIT Federal Realty Investment Trust (FRT) were added to the list and the REIT HCP, Inc. was removed from the index due to spinning off HCR Manor Care and reducing their dividend.
Also in 2017, CR Bard (BCR) was removed from the list due to its purchase by Becton Dickinson (BDX) on December 29, 2017.
2018- Praxair (PX), A.O. Smith (AOS) and Roper Technologies (ROP) were added to the list. Praxair is to be acquired by Linde.

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