What You Need To Know About Dividend Aristocrats
Companies that have the capacity to continually increase their shareholders’ payment for a very long period of time are rare to find. Many income investors are often on the scramble to invest in shares with Dividend Aristocrats. In 2018, only 53 companies were listed on the S&P 500 membership index of qualified Dividend Aristocrats.
By definition, Dividend Aristocrats are those companies listed on the S&P 500 membership index that can boast a continuous annual raise of share prices for a consecutive 25 years period or more without a decrease. Within the 25 consecutive year interval or more, Dividend Aristocrats are expected to make a continuous increase in payment of shareholders’ money. This is what qualifies a company to become regarded as a Dividend Aristocrat. Super Dividend Aristocrats are companies that have remained so for 50 years or more.
Having to maintain such a financial pedigree through recessions and market downturns is a proof that such a company is capable to last for a very long time to come. In the course of this study, there are two companies that have been found to have gained a lot of admiration for the niche they have carved for themselves as Dividend Aristocrats. They are Target, previously known as Dayton Corporation and the other one is AT&T.
Target has maintained an annual increase of shareholders’ payment for 50 consecutive years since it went public in 1967 with a $34 per capita share. It currently pays a forward yield of 3.4%.
AT&T kept its annual dividends raised for 30 years, and it is currently paying forward yields of 5.4%. And in the past one year, it has spent 41% of its earnings, and 68% of its free Cash Flow on dividends. Southwestern Bell (SBC) which was a splinter company from AT&T, split away from AT&T due to the antitrust regulations in 1983. In the same year, it made its public declaration at $1.25 per share. It is calculated that with just $1,000 ($2,354 in 2018) it would have been enough to purchase 800 shares from SBC.
Between 1989 and 2001, Dividend Aristocrats have increased membership to 64 qualified companies. Today, American State Waters is the longest dividend growth streak with 61 years of ceaseless share price increase.
ETF (Exchange Trust Fund)
It is very important to know that some Dividend Aristocrats are better than others, even though they are all dependable and solid companies. In the light of this acknowledgment, one can decide to invest in a company’s share by giving them a preferential consideration on the basis of good and best.
Every investor wants the best that suits him, therefore, Dividend Aristocrats are grouped along the lines of ETF analysis to decide which one best suits your investment aims. Buying stocks through the ETF, like ProShare or S$P 500 Dividend Aristocrats ETF is much advisable, especially as the elite group of dividends has conquered the wider stock market.
Because ETF continually experiences price changes throughout the days as they are bought and sold, it is necessary to select which Dividend Aristocrat best matches your requirement and aims. It is equally advisable to check out for stocks that sell at cheaper rates, relative to their cash flow, and which the company has earned the highest returns on invested capital, as well as stocks that offer the highest dividend yields.
Best Dividend Aristocrats of 2018
To be listed as a Dividend Aristocrat has such advantage of raising the confidence of share investors to commit their monies with such a company. To enjoy such advantage, companies must attain certain requirements before qualifying for listing. The three major requirements include: that the company must be in the S&P 500 with a track record of 25 consecutive years or more, and of ceaseless increase in shareholders’ payments. Also, it must meet certain minimum size and liquidity requirements. These are some of the best Dividend Aristocrats of 2018:
1. McDonald’s Corporation
In September 2017 the company approved a payout increase of 7%. It paid shareholders a $1.01 quarterly dividend in December 2017 with a 2.3% yield in the commemoration of its 41 years of ceaseless annual raises on shareholders’ payment.
Has an outstanding 40 consecutive years of increase in shareholders’ payment. It is one of the world’s leading medical equipment company, Medtronic pays out $0.46 quarterly dividend on a 2.3% current yield, with a low payout ratio of 49%.
3. Abbot Laboratories
Started her unending string of straight increase of shareholders’ payment since 1924. Currently, it has added another 46 consecutive years of ceaseless payment of dividends to investors. Shares are currently placed at a surging height of 4%, with an increased yield of 1.9%.
4. Chevron Corporation
It is an oil and gas leading industry, globally Its dividend yield is 3.38%. This resulted in a quarterly payout of $1.08 in December 2017. Also, the yield is far above 2.13%. It has remained on the steady increase of dividend for 29 years now.
5. Stanley Black & Decker Inc.
It is a manufacturing company with an incredible 141 consecutive years of dividend payments. Its records as a Dividend Aristocrat remains unmatched by any industrial company on the New York Stock Exchange. It increased dividends in each of the past 50 years. $0.63 quarterly dividend was recently received in December 2017 on a 1.51% yield.
Advantages of Investing With Dividend Aristocrats
Dividend Aristocrats are reputed for running and managing an efficient capital management and sufficient cash flow and a long-term rising dividends. Thus, any company that can effectively and efficiently manage its share market for 25 years and/or above, through ups and downs of the market cycle, and yet stands without bending to pressure remains the darling of all meaningful income investors.
Dividend Aristocrats still remains the best and most secured investment portfolio for income investors.