From offering long-term and regular predictable income to helping you make the most of capital appreciation over time, there certainly is an appeal to dividend stocks. And while many have outperformed the stock market at one point or another, not all dividend stocks are made equal.
Widely known as the cream of the dividend stock crop, these companies have not only generated strong profits and grown their earnings year after year, but they have a rich history of uninterrupted dividend payouts that stretch back several decades.
Dubbed Dividend Aristocrats, Kings and Zombies, these are rock-solid investments you can bank on.
The Dividend Aristocrats
Launched by Standard and Poor’s (S&P) in May 2005, Dividend Aristocrats are a select group of S&P 500 stocks that have paid and increased their base dividend every year for at least 25 consecutive years. As of January 22, 2021, there are 65 Dividend Aristocrats.
Boasting a long history of outperforming the market, these companies are considered quality businesses based on their long dividend histories, as well as their strong and competitive advantage, making them one of the most attractive stocks to own.
How are Dividend Aristocrats selected?
In order for a company to join the dividend aristocrat club they must:
Form part of the S&P 500
Have 25+ consecutive years of dividend increases.
Have a minimum float-adjusted market cap of at least $3 billion.
An average of at least $5 million in daily share trading value for the previous three months.
The S&P Dow Jones Indices, which owns the S&P 500 index, reviews the list of qualifying companies annually and updates it accordingly. In addition, at the beginning of every quarter, the index is reweighted, in other words, the size of each company on the list is reset so that they all make up an equal percentage of the index.
Below is a table of the top 10 Aristocrats by dividend yield:
COMPANY | TICKER | PRICE | DIVIDEND YIELD | LAST DIVIDEND | SECTOR |
AT&T Inc | T | $32.02 | 6.50% | $0.52 | Public Utilities |
Exxon Mobil Corporation | XOM | $59.19 | 5.88% | $0.87 | Energy |
Chevron Corporation | CVX | $106.11 | 4.91% | $1.34 | Energy |
AbbVie Inc | ABBV | $113.90 | 4.35% | $1.3 | Health Care |
Consolidated Edison Inc | ED | $78.12 | 3.94% | $0.775 | Public Utilities |
People’s United Financials Inc | PBCT | $18.5 | 3.91% | $0.183 | Finance |
Federal Realty Investment Trust | FRT | $112.57 | 3.76% | $1.06 | Consumer Services |
Walgreens Boots Alliance Inc | WBA | $54.12 | 3.46% | $0.468 | Health Care |
Fanklin Resources Inc | BEN | $32.04 | 3.43% | $0.28 | Finance |
Kimberly-Clark Corporation | KMB | $134.72 | 3.28% | $1.14 | Consumer Durables |
What has the performance of Dividend Aristocrats been like so far?
According to the ProShares Dividend Aristocrats ETF (NOBL), in March 2021 the Dividend Aristocrats registered a positive total return of 7.6%, while their full year 2020 performance has been that of 8.68%. And if we look at their long-term performance, the Dividend Aristocrats index has generated over 330% since the end of 2009, over 14% in annualised returns.
Other Popular Dividend Aristocrats
Johnson & Johnson (JNJ)
A global healthcare giant which manufactures and sells healthcare products through its three segments, namely pharmaceuticals, medical devices and consumer health products, Johnson & Johnson has a diversified business model and strong performance. In 2020, revenue was higher by 0.6% to $82.6 billion from the previous year, while adjusted EPS was at $8.03. At the same time, the company expects revenue of $90.5 billion to $91.7 billion and adjusted EPS of $9.40 to $9.60 for 2021.
Impressively, Johnson & Johnson has increased its dividend for 58 consecutive years, with its stock yield currently at 2.5%.
Add JNJ to your portfolio.
Walmart Inc (WMT)
A heavyweight in the retail space, Walmart is well-known for being both a strong brand and maintaining industry dominance, however, it has also been praised for its long dividend history. Its first dividend back in 1974 was that of $0.05 per share. Marking its 48th consecutive year of dividend increases in February 2021, the company announced that it will raise this to $2.20 per share.
Despite the constantly changing environment of the retail industry, Walmart has excelled at adapting itself, by investing heavily in its eCommerce platform. As a result, for the fourth quarter, the company’s revenue increased by 7.3%, whereas for fiscal year 2020, revenue was up 6.7%.
Have a look at why Walmart is a retail powerhouse and head over to Moneybase Invest to buy WMT stock.
The Procter & Gamble Company (PG)
A consumer products behemoth that sells its products in more than 180 countries, Procter & Gamble’s portfolio include core brands like Gillette, Tide, Crest, Pampers, Head & Shoulders, Bounty and Oral-B, to name a few. A time-tested dividend growth company with strong qualities, following a complete overhaul of its product portfolio back in 2018, the company saw renewed growth potential.
For fiscal year 2020 net sales amounted to $71 billion, an increase of 5% when compared to the previous year. On the other hand, core earnings per share were $5.12, an increase of 13% versus the previous year, driven by an increase in net sales, as well as in core operating profit margin. In addition, the company has been paying dividends for 130 years, while it has consistently increased its dividend for 64 consecutive years.
Add PG to your portfolio today.
The Coca-Cola Company (KO)
It has been quenching peoples’ thirst for decades, while its brands account for about 2 billion servings of beverages worldwide every day. The Coca-Cola Company is an iconic brand and the world’s largest beverage company with more than 500 unique names under its wing. But as consumers’ tastes have shifted to healthier alternatives, the conglomerate has made great strides to reposition its portfolio by expanding into juices and teas to cater to a more health-conscious consumer base. And doing so appears to have paid off. The company reported an increase of 5% in first-quarter net revenues for 2021 to $9 billion and organic revenues (non-GAAP) grew 6%, which was driven by 5% growth in concentrate sales. Adjusted earnings-per-shares also increased 8% for the quarter.
With a market cap of $232.831 billion, the Coca-Cola Company is a so-called mega-cap stock and one of the steadiest and most reliable dividend payers among blue-chip stocks. Its dividend yield stands at 3.08%, while its annual dividend is that of $1.68 per share.
Have a look at why Coca-Cola is the greatest beverage company of all time and click here to make KO stock yours.
The Dividend Kings
A stock with 50 or more consecutive years of dividend increases, Dividend Kings are companies that have shown resilience and