Dividend Aristocrats are U.S. companies that have had their dividends increase for 25 consecutive years. A dividend aristocrat is most often found among large, quality companies (blue chips). The S&P 500 Index Dividend Aristocrats measures the performance of these companies. If one of them does not increase its dividend during a year, it is removed from the index. Our portfolio gives pride of place to those companies which offer solid, sustainable and growing returns.
We have already explained the virtues of growing dividends in the articles:
- Growing dividends that beat the market (1/3)
- Growing dividends that beat the market (2/3)
- These growing dividends that beat the market (3/3)
- Why are growing dividends magical?
Below we have excerpted from three Insider Monkey articles on Seeking Alpha.
Dividend Aristocrats have beaten the S&P 500 Index over the past 1, 3, 5 and 7 years. The table below shows the recent performance of the S&P 500 Dividend Aristocrats and S&P 500:
| Situation as of December 31, 2010 | DividendAristocrats | S&P 500 | |
| Profitability | 1 month | 5,49% | 6,68% |
| 3 Months | 6,98% | 10,76% | |
| YTD | 19,35% | 15,06% | |
| Profitability annualized | 1 year | 19,35% | 15,06% |
| 3 years | 5,67% | -2,86% | |
| 5 years | 6,27% | 2,29% | |
| 7 years old | 7,16% | 3,85% | |
| Annualized return | 2,82% | 1,81% | |
Over the past 12 months, companies in the S&P 500 Dividend Aristocrats Index have gained 17,24%, compared to 14,44% gain for the S&P 500. The average distribution ratio of these securities is 45% and the average rate of return is 2.66%.
Our research has shown that investors have been able to beat the market by investing in dividend-paying stocks. These stocks are also less risky and less susceptible to bear markets, compared to other stocks in the S&P 500 index.
The S&P 500 Dividend Aristocrats is a very prestigious and popular index among dividend investors. Large-cap companies in this index must also have an average daily trading volume of at least $5 million during the six months preceding inclusion in the index.
As we are concerned about the Fed's accommodative monetary policy, we believe investors should protect themselves from theinflation. We believe that Dividend Aristocrats, because they are able to increase their distributions, are attractive options for defensive investors who require a better risk-return combination and some protection against inflation.
Sources:http://seekingalpha.com/article/260383-beat-the-market-by-investing-in-s-p-500-dividend-aristocratshttp://seekingalpha.com/article/278677-investing-in-dividend-aristocrats-part-1?source=feedhttp://seekingalpha.com/article/279102-investing-in-dividend-aristocrats-part-2Discover more from dividendes
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Good morning,
I totally agree, investing in companies that pay dividend aristocrats is an easy way to beat the market.
On the other hand, you have to choose the companies carefully, there are some that are aristocrats in relation to the dividend but which are bearish...