Historically Great Dividend Companies
There is no question that careful stock selection is crucial to your success as a dividend investor. Luckily, there are several lists that allow you to identify dividend paying stocks more quickly and easily.
Perhaps the most well-known list is Dividend Aristocrats. Dividend aristocrats are made of an elite group of companies. As of June 2021, only 65 companies qualify for Aristocrat status. Dividend aristocrats are mature companies. They are not going to represent growth companies or emerging markets. Of course, they must meet rigorous requirements for qualification
Dividend Aristocrats Requirements
To become a Dividend Aristocrat, a company must have increased its dividend payment for at least 25 consecutive years. It cannot have skipped a year, even in down markets.
It must also be in the US S&P 500, and it must have float-adjusted market capitalization of at least $3 billion, and an average daily trading volume of at least $5 million. In other words, a company must be one of the largest market cap stocks in the US.
Dividend Aristocrats Benefits
There are many benefits to owning a Dividend Aristocrat. First, because these stocks have a long history of increasing dividend payments year after year. Next, they have a track record of proven safety even in short and long-term declining markets. This history means they can be particularly beneficial for buy and hold investors. Furthermore, there is a good deal of pressure to remain on the list. So, once a company makes the list they rarely fall off.
Most dividend investors know the importance of a consistent payment, but a growing payment is even more valuable. Identifying companies with goals devoted to their dividend will help dividend investors create an optimal portfolio. Consistent, growing payments can help you achieve your goals faster, retire sooner, or better whether price declines.
The Dividend Aristocrat list is made up of some of the most well-known companies in the world including Coca-Cola, Johnson & Johnson, McDonald’s and Wal-Mart.
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In addition to Dividend Aristocrats, there are also Dividends Kings. Dividend Kings are considered to be the best of the best and make up the most exclusive list of dividend paying stocks. The only requirement is that they must have increased their dividend for at least 50 consecutive years. As of August 2021, a mere 31 companies qualify for this status.
While there is some overlap between Dividend Aristocrats and Dividend Kings, not all Kings are also on the Aristocrat list simply because Kings are not required to be on the S&P 500.
Next, we have Dividend Champions. Like Dividend Aristocrats, they must also have increased their dividend for at least 25 consecutive years. However, they do not have to be a member of S&P 500 and they do not have to meet trading volume requirements. The purpose of this list is to identify companies with a strong dividend history, regardless of size or market cap of the company. Because of this, the list is more inclusive than the Aristocrat list and includes around 130 companies.
Lists with Shorter Time Periods
Now, let’s examine lists that require a shorter period of time for increasing dividend payments.
First, we have Dividend Contenders. To be a contender, a company must have increased their dividend for at least 10 consecutive years. There are currently over 300 Dividend Contenders.
Like Contenders, Dividend Achievers must have also increased their dividend payments for at least 10 consecutive years. However, they are required to trade on the New York Stock Exchange or NASDAQ, but they do not have to be on the S&P 500. Achievers are considered to be quality dividend growth stocks. 351 currently qualify for the list.
Next, we have Dividend Challengers. To be a challenger, a company must have 5 years of consecutive dividend increases. This list will include newer companies, growth companies, or companies that have been inconsistent in their dividend payments.
Apple may be the most famous Dividend Challenger. It is a hugely popular, mega-cap stock. But as of 2021, it has only increased its dividend payment for 9 consecutive years. It is still considered a growth stock.
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