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. Over the past 10 years through the period ending March 31, 2020, the S&P 500 Dividend Aristocrat index has returned 10.98% on an average annual basis whereas the S&P 500 index has returned 10.53% annually during that same period. During this same 10-year period, the standard deviation of the S&P 500 was 13.30% while the Dividend Aristocrats' was 12.47%.
The increased popularity of "Dividend Growth" investing in recent years has elevated the public profile of the S&P 500 Dividend Aristocrat index. The S&P 500 Dividend Aristocrat index has traditionally 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 constructively as they seek companies that possess a combination of both capital appreciation and a consistent and increasing dividend payout.
The S&P 500 Dividend Aristocrat index has historically consisted of approximately 50 large-cap companies including both value and growth stocks, spanning across all eleven sectors within the S&P 500 index.
To be eligible for the S&P 500 Dividend Aristocrat index, a stock must have:

History

Since the 2008 financial crisis, the S&P 500 Dividend Aristocrat list has evolved as follows:
2020 - United Technologies became Raytheon after divestment of some divisions.
In 2020 Ross Stores suspended its dividend on May 21st due to the COVID-19 crisis and was removed from the list.
Also in 2020 Amcor, Atmos Energy, Realty Income, Essex Property Trust, Ross Stores, Albemarle Corporation, and Expeditors International will be added to the list effective prior to market open on February 3.
2019 - Chubb, People's United Financial, Caterpillar Inc., and United Technologies were added to the list.
2018- Praxair, A.O. Smith and Roper Technologies were added to the list. Praxair was subsequently replaced by Linde plc, which was created by the merger of Linde AG and Praxair.
2017- General Dynamics and the REIT Federal Realty Investment Trust 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 was removed from the list due to its purchase by Becton Dickinson on December 29, 2017.
2016 - Chubb Corp was removed upon acquisition by ACE Limited.
2015 - Family Dollar Stores was removed from the list due to its purchase by Dollar Tree. Also in 2015, Sigma-Aldrich Corp was removed from the list due to its acquisition by Merck.
2014 - Bemis was removed from the S&P 500 index and therefore dropped from the S&P 500 Dividend Aristocrat list.
2013 - Pitney Bowes was removed after slashing the dividend from 37.5c to 18.75c per quarter per share.
2012 - CenturyLink 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:
  1. AT&T
  2. Colgate-Palmolive
  3. Franklin Resources
  4. Genuine Parts
  5. Health Care Property Investors
  6. Illinois Tool Works
  7. Medtronic
  8. Sysco
  9. T. Rowe Price
2011 - Three companies were added, Ecolab, Hormel Foods, and McCormick.
2010 - A second round of ten companies were dropped: Avery Dennison, BB&T, Gannett, General Electric, Johnson Controls, Legg Mason, M&T Bank, Pfizer, State Street Bank, and US Bancorp.
Also in 2010, Brown Forman was added.
2009 - The list declined from 52 companies in 2008 to 43 companies in 2009, as nine companies were delisted or cut their dividend payouts; some of them due to the 2008 financial crisis. They were: Anheuser Busch, Bank of America, Comerica, Fifth Third Bank, Keycorp, Progressive Corp, Regions Financial, Synovus Financial, and Wm. Wrigley, which was acquired by Mars.
Also in 2009, there were two additions - Bemis and Leggett & Platt.

Investing

The ProShares S&P 500 Dividend Aristocrats ETF has tracked the S&P 500 Dividend Aristocrats Index since 2013.
By taking a Targeted Outcome approach, Cboe launched an index called Cboe S&P 500 Dividend Aristocrats Target Income Index. This index is designed with the primary goal of generating an annualized level of income that is approximately 3.5% over the annual dividend yield of the S&P 500 Index and a secondary goal of generating price returns that are proportional to the price appreciation of the Index. The SPAI Index investment strategy includes buying the stocks contained in the S&P 500 Dividend Aristocrat Index, and partially "writing" weekly "covered" call options on each stock, generally on the last trading day of each week.
Additionally, Cboe launched another index called Cboe S&P 500 Dividend Aristocrats Target Income Index - Monthly Series. This index differs from the weekly series in that this index is designed with the primary goal of generating an annualized level of income that is approximately 3% over the annual dividend yield of the S&P 500 Index by partially "writing" monthly "covered" call options on each stock, generally on the third Friday of each month.
Cboe Vest, a subsidiary of Cboe, is an asset management firm that has released a that seeks to track the 'SPAI' index, as well as an that seeks to track the 'SPATI' index.
Other popular ETFs that mimic the S&P 500 Dividend Aristocrat index but do not replicate it exactly include the exchange-traded fund SPDR S&P Dividend which tracks the S&P High Yield Dividend Aristocrats Index. The S&P High Yield Dividend Aristocrat Index is a different index than the S&P 500 Dividend Aristocrat Index. The High Yield version tracks the S&P Composite 1500 index, which contains three times as many stocks than the S&P 500 index. Another difference is that the High Yield version contains stocks that have increased their dividends for at least 20 consecutive years while the more popular and widely held Dividend Aristocrat Index has stocks that have increased their dividends for at least 25 consecutive years.
One other well-known ETF that mimics but does not exactly track the S&P 500 Dividend Aristocrat Index is the iShares Select Dividend. This ETF tracks the Dow Jones U.S. Select Dividend Index.

S&P 500 Dividend Aristocrat companies (effective July 03, 2020)

See also

S&P 500 Dividend Aristocrat Sector Weightings as of March 31, 2020

  1. Consumer Staples - 23%,
  2. Industrials - 21%,
  3. Materials - 12%,
  4. Health Care - 10%,
  5. Financials - 10%,
  6. Consumer Discretionary - 10%,
  7. Real Estate - 4%,
  8. Utilities - 3%,
  9. Energy - 3%,
  10. Technology - 2%,
  11. Communications- 2%