The Top 7 Dividend Aristocrats by Yield: February 2024 and Beyond
Investing in dividend aristocrats has long been hailed as a strategy for building wealth over time. In this article, we’ll explore the concept of dividend aristocrats, their significance in the market, and a curated list of the top seven dividend aristocrats as of February 2024.
The Power of Dividends
Understanding the impact of dividends is crucial for investors. John D. Rockefeller’s emphasis on dividend income reflects its potency in compounding wealth. Between January 2000 and January 2020, the S&P 500 index yielded a substantial return, but with dividends reinvested, the return skyrocketed to 235.65%.
What Defines a Dividend Aristocrat?
Delving into the specifics, a dividend aristocrat is an S&P 500 stock that has consistently increased its dividend every year for at least 25 years. Unlike other stocks, their focus is on the dollar value of dividends per share, not necessarily on increasing dividend yields.
The Landscape of Dividend Aristocrats
With a total of 66 dividend aristocrats today, these stocks span various sectors, including healthcare, consumer staples, financial, and industrial. Two common characteristics unite them – they are established, having been publicly traded for at least 25 years, and they are large-cap stocks with a market capitalization of at least $13.1 billion.
The Top 7 Dividend Aristocrats List
Let’s dive into the crux of our discussion – the top seven dividend aristocrats based on their current dividend yield, updated weekly as of February 1, 2024.
| Ticker | Company | Dividend Yield |
|---|---|---|
| WBA | Walgreens Boots Alliance Inc | 6.60% |
| MMM | 3M Co. | 6.57% |
| O | Realty Income Corp. | 5.57% |
| AMCR | Amcor Plc | 5.21% |
| BEN | Franklin Resources, Inc. | 4.63% |
| TROW | T. Rowe Price Group Inc. | 4.46% |
| FRT | Federal Realty Investment Trust. | 4.26% |
Source: Finviz. Data is current as of Feb. 1, 2024, and is for informational purposes only.
Dividend Kings vs. Aristocrats
Distinguishing between dividend kings and aristocrats is vital. While both groups comprise stocks with a history of increasing dividends, kings have surpassed a 50-year milestone. Despite the overlap, dividend kings are a more exclusive group, numbering less than 50 compared to the 66 dividend aristocrats.
How to Invest in Dividend Aristocrats
For those entering the world of investing and eyeing dividend aristocrats, the initial step is opening a brokerage account. The next decision lies in choosing between individual stocks or a dividend aristocrats fund.
Individual stocks offer potential but come with risks. Researching numerous stocks can be time-consuming and expensive. Alternatively, dividend aristocrats ETFs provide exposure to a diversified group without the intricacies of individual stock selection.
Ex-Dividend Dates
Understanding ex-dividend dates is crucial for investors holding dividend-paying stocks or ETFs. Missing the ex-dividend date means forfeiting the next dividend payment. Investors should be aware of these dates before making buying or selling decisions.
The Complete List of Dividend Aristocrats
For a comprehensive view, here is the complete list of all 66 dividend aristocrats in the S&P 500 index, showcasing their symbols and company names.
| Symbol | Company Name |
|---|---|
| NEE | NextEra Energy Inc. |
| CVX | Chevron Corp. |
| SHW | The Sherwin-Williams Co. |
| JNJ | Johnson & Johnson |
| CB | Chubb Ltd. |
| ABT | Abbott Laboratories |
| … | … |
FAQs
- How often do dividend aristocrats increase their dividends?
- Dividend aristocrats increase their dividends annually, consistently doing so for at least 25 years.
- Are dividend aristocrats limited to specific sectors?
- No, dividend aristocrats span various sectors, including healthcare, consumer staples, financial, and industrial.
- What is the significance of market capitalization for dividend aristocrats?
- To be considered dividend aristocrats, stocks must have a market capitalization of at least $13.1 billion.
- Can individual investors easily buy shares of dividend aristocrats?
- Yes, individual investors can buy shares of dividend aristocrats through brokerage accounts.
- Is there a specific ETF tracking dividend aristocrats?
- Yes, the ProShares S&P 500 Dividend Aristocrats ETF tracks the official 66 S&P 500 dividend aristocrats.
- What is the ProShares S&P 500 Dividend Aristocrats ETF’s performance history?
- Investors should review the ETF’s performance history and holdings to make informed decisions.
- How frequently do companies enter or exit the list of dividend aristocrats?
- Changes in the list can occur, and investors should stay updated on these dynamic shifts.
- Are there risks associated with individual dividend aristocrat stocks?
- Yes, individual stocks carry risks, and investors should conduct thorough research before investing.
- Can dividend aristocrats provide capital appreciation in addition to dividends?
- Yes, some dividend aristocrats may also offer capital appreciation potential along with reliable dividends.
- Is it advisable for novice investors to start with dividend aristocrats?
- Novice investors can consider dividend aristocrats, but it’s essential to understand the associated risks and conduct thorough research.
Exploring Dividend Aristocrats ETFs
Investors seeking exposure to dividend aristocrats without the intricacies of individual stock selection often turn to Exchange-Traded Funds (ETFs). One notable option is the ProShares S&P 500 Dividend Aristocrats ETF, which strictly tracks the 66 official S&P 500 dividend aristocrats. Several other high-dividend ETFs are also available, containing similar groups of stocks consistently raising their dividends over time.
Investing in ETFs provides a level of diversification, reducing the risk associated with holding individual stocks. It’s essential to explore the specific holdings and performance of these ETFs before making investment decisions.
The Importance of Ex-Dividend Dates
One crucial aspect of investing in dividend-paying stocks is understanding ex-dividend dates. This date determines whether an investor is eligible to receive the next dividend payment. If a stock is purchased on or after its ex-dividend date, the investor won’t receive the upcoming dividend. This emphasizes the need for careful consideration and timing in investment strategies.
The Dynamic Landscape of Dividend Aristocrats
The list of dividend aristocrats is not static. Companies can enter or exit this esteemed group based on their ability to consistently increase dividends. Investors should stay informed about changes in the list, as alterations may impact the performance and characteristics of their investment portfolios.
Navigating Individual Dividend Aristocrat Stocks
For those inclined towards a hands-on approach, investing in individual dividend aristocrat stocks offers a unique experience. However, it comes with the responsibility of thorough research. Understanding the financial health, management strategies, and future prospects of each company is paramount.
While individual stocks can be rewarding, they also carry inherent risks. Investors should be prepared to monitor their investments closely and stay informed about any developments that may affect the dividend-paying capabilities of these companies.
Unlocking the Potential of Dividend Aristocrats
Investing in dividend aristocrats involves more than just chasing high yields. It requires a strategic approach, considering factors such as the company’s history, financial stability, and future growth prospects. By aligning investments with a well-thought-out strategy, investors can unlock the true potential of dividend aristocrats.
Conclusion
In conclusion, the allure of dividend aristocrats lies in their ability to provide a reliable income stream through consistently increasing dividends. Whether through individual stock selection or ETF investments, understanding the nuances of the market, staying abreast of ex-dividend dates, and adapting to the dynamic landscape are keys to success in dividend aristocrat investing.
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