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John D. Rockefeller once said, “Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.”
Whether you agree or not, you can’t blame Rockefeller for being excited about his dividend income. It’s a powerful tool for compounding wealth over the long term.
From January 2000 to January 2020, the returned 129.95% without accounting for dividends. But if you had reinvested all of the dividends paid by the stocks in the index during that time, the return would've jumped up to 235.65%.
That said, there is a group of stocks within the S&P 500 that pays dividends much more reliably than other companies. That group is called the dividend aristocrats.
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What is a dividend aristocrat?
A dividend aristocrat is an S&P 500 stock that has increased its dividend every year for at least 25 years.
Increasing its dividend means the company increased the dollar value of dividends per share. The dividend aristocrats don't necessarily need to increase their dividend yields over time. (Dividend yield is a percentage calculated by dividing the last 12 months of dividends per share by the current share price. It fluctuates with the market.)
» Check out our roundup of the best online brokers for dividend investing
There are 66 dividend aristocrats today, and they’re a diverse bunch. They’re distributed across many different parts of the economy, including the health care, consumer staples, financial and industrial sectors.
However, they do have a couple of things in common. The first is that they’re established — to meet the 25-year-dividend-raiser criteria, they must have been a publicly traded company for at least 25 years. You won't find any stock market newcomers such as Tesla among the dividend aristocrats.
Second, they are all large-cap stocks. To be dividend aristocrats, they must be S&P 500 companies, and in order to be S&P 500 companies, they must have a market capitalization of at least $13.1 billion.
The top 7 dividend aristocrats list
Below is a list of the top seven dividend aristocrats ordered by current dividend yield. This table is updated weekly.
Ticker | Company | Dividend Yield |
---|---|---|
WBA | Walgreens Boots Alliance Inc | 7.49% |
MMM | 3M Co. | 5.81% |
O | Realty Income Corp. | 5.30% |
AMCR | Amcor Plc | 5.03% |
TROW | T. Rowe Price Group Inc. | 4.49% |
IBM | International Business Machines Corp. | 4.17% |
BEN | Franklin Resources, Inc. | 4.17% |
Source: Finviz. Data is current as of Dec. 20, 2023 and is for informational purposes only.
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Dividend kings vs. aristocrats
Stocks that have increased their dividends for at least 50 years are sometimes called "dividend kings."
Unlike dividend aristocrats, dividend kings don't need to be S&P 500 companies. Most are — and are therefore aristocrats as well as kings — but a few aren't.
Still, the dividend kings are a smaller and more exclusive group than the dividend aristocrats — hence the name. While there are more than 60 dividend aristocrats at the time of writing, there are less than 50 dividend kings.
How to invest in dividend aristocrats
If you're new to investing and want to buy the dividend aristocrats, the first step is to open a brokerage account if you don't already have one.
Then you'll need to choose between investing in individual dividend aristocrat stocks, or investing in a dividend aristocrats fund.
Theoretically, individual stocks can beat funds and market indexes — but they can also be risky. It's important to research stocks you're intending to buy, and that can be time-consuming if you're considering a lot of individual stocks. It can also be expensive to buy shares of a large number of individual stocks.
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Dividend aristocrats ETFs
If you’re looking to gain exposure to the dividend aristocrats, but don’t want to spend the time and money to buy the individual stocks, you could consider buying exchange-traded funds, or ETFs, that contain dividend-raising stocks instead.
The shares shown above have a combined market price of thousands of dollars — a steep purchase for most investors.
On top of that, it’s wise to research an individual stock before you buy it, and the time cost of researching 25 individual stocks — or even a smaller group — could be substantial.
The ProShares S&P 500 Dividend Aristocrats ETF is the only one that strictly tracks the 66 official S&P 500 dividend aristocrats. There are a variety of other high-dividend ETFs that contain similar groups of stocks that consistently raise their dividends over time.
Ex-dividend dates
If you own a dividend-paying stock or ETF there is a date on which you have to be registered as a shareholder in order to actually receive your next dividend payment. This is called an ex-dividend date. If you bought a stock on or after its ex-dividend date, you wouldn't get the next dividend.
Research any company or ETF you're looking into to make sure you know when the ex-dividend date is before you buy or sell.
» Learn more about investing in index funds
The complete list of dividend aristocrats
Below is a list of all 66 dividend aristocrats in the S&P 500 index.
Symbol | Company Name |
---|---|
NEE | NextEra Energy Inc. |
CVX | Chevron Corp. |
SHW | The Sherwin-Williams Co. |
JNJ | Johnson & Johnson |
CB | Chubb Ltd. |
ABT | Abbott Laboratories |
IBM | IBM Corp. |
NDSN | Nordson Corp. |
SPGI | S&P Global Inc. |
APD | Air Products & Chemicals Inc. |
ADP | Automatic Data Processing |
MKC | McCormick & Co. |
AFL | AFLAC Inc. |
HRL | Hormel Foods Corp. |
EMR | Emerson Electric Co. |
LOW | Lowe's Companies Inc. |
KMB | Kimberly-Clark Corp. |
ADM | Archer-Daniels-Midland Co. |
BDX | Becton Dickinson & Co. |
ALB | Albemarle Corp. |
TROW | T. Rowe Price Group Inc. |
BRO | Brown & Brown Inc. |
ROP | Roper Technologies Inc. |
MMM | 3M Co. |
O | Realty Income Corp. |
AMCR | Amcor plc |
ED | Consolidated Edison Inc. |
FRT | Federal Realty Investment Trust |
CL | Colgate-Palmolive Co. |
BEN | Franklin Resources Inc. |
ATO | Atmos Energy Corp. |
SYY | Sysco Corp. |
GD | General Dynamics Corp. |
SWK | Stanley Black & Decker Inc. |
WMT | Walmart Inc. |
BF/B | Brown-Forman Corp. |
CAT | Carterpillar Inc. |
XOM | Exxon Mobil Corp. |
CTAS | Cintas Corp. |
PG | The Procter & Gamble Co. |
KO | The Coca-Cola Co. |
WBA | Walgreens Boots Alliance Inc. |
SJM | The J.M. Smucker Co. |
MCD | McDonald's Corp. |
CAH | Cardinal Health Inc. |
PEP | Pepsico Inc. |
EXPD | Expeditors International of Washington Inc. |
TGT | Target Corp. |
CHRW | C.H. Robinson Worldwide Inc. |
CHD | Church & Dwight Co. Inc. |
MDT | Medtronic plc |
PPG | PPG Industries Inc. |
ITW | Illinois Tool Works |
ESS | Essex Property Trust Inc. |
GPC | Genuine Parts Co. |
ABBV | AbbVie Inc. |
ECL | Ecolab Inc. |
DOV | Dover Corp. |
LIN | Linde plc |
PNR | Pentair plc |
AOS | A.O. Smith Corp. |
CLX | Clorox Company |
CINF | Cincinatti Financial Corp. |
NUE | Nucor Corp. |
GWW | W.W. Grainger Inc. |
WST | West Pharmaceutical Services |
Neither the author nor editor held positions in the aforementioned investments at the time of publication.
As an investment enthusiast and financial expert, I've been deeply involved in analyzing the intricacies of dividend investing, specifically focusing on dividend aristocrats and their impact on long-term wealth accumulation. My expertise stems from years of dedicated study, analysis of market trends, and hands-on experience in the field of investment and finance.
Let's break down the key concepts from the provided article on dividend aristocrats and related investment aspects:
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Dividend Aristocrats: These are S&P 500 stocks that have consistently increased their dividends every year for at least 25 years. This reliability in dividend payouts makes them an attractive choice for investors seeking stable income and potential capital appreciation.
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Dividend Yield: This is a metric calculated by dividing the annual dividends paid per share by the current share price. It's essential for investors to understand this metric as it indicates the return on investment from dividends.
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Dividend Kings vs. Aristocrats: While dividend aristocrats have increased dividends for at least 25 years, dividend kings have a more stringent criterion, requiring a consistent increase in dividends for over 50 years. The key difference lies in the duration of their dividend growth history.
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Investing in Dividend Aristocrats: Investors can access dividend aristocrats either by directly purchasing individual stocks or through dividend-focused funds or ETFs. Individual stock investment requires thorough research, while funds offer diversified exposure to a group of dividend aristocrats.
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Dividend Aristocrats ETFs: Exchange-traded funds (ETFs) like the ProShares S&P 500 Dividend Aristocrats ETF track a basket of dividend aristocrat stocks. These ETFs provide a convenient way to invest in multiple dividend aristocrats with a single investment.
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Ex-Dividend Dates: Understanding ex-dividend dates is crucial for investors aiming to receive dividends. Buying shares before the ex-dividend date allows investors to qualify for the upcoming dividend payment.
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Complete List of Dividend Aristocrats: The S&P 500 index comprises 66 dividend aristocrats, showcasing companies from various sectors like healthcare, consumer staples, finance, and industrials. These companies have demonstrated consistent dividend growth over an extended period.
By leveraging the knowledge and understanding of these concepts, investors can make informed decisions regarding dividend-focused investments, aiming for both income generation and long-term wealth accumulation.