Seven Dividend Aristocrats Yielding At Least 4%
By Robert Rapier, Investing Daily, Wednesday, July 27
If you are an income investor, you want a portfolio full of companies with sustainable dividends. The S&P 500’s Dividend Aristocrats is a good place to start.
By definition, a Dividend Aristocrat must be in the S&P 500 index and have recorded dividend increases for at least the past 25 consecutive years. A company must also meet certain market capitalization and liquidity requirements to appear on the list.
The first list of Dividend Aristocrats contained 26 companies and was published in 1989. Each year the list is updated. The list peaked at 64 companies in 2001, and contracted sharply during the financial crisis of 2008-2009. But this year saw the list rise back to 65 companies.
The list declined by one in April after M&T Bank Corporation (NYSE: MTB) acquired Dividend Aristocrat People’s United Financial, Inc.
You might expect that companies that have raised their dividends for at least 25 consecutive years would have attractive yields. You would be wrong for the most part.
Most of the companies on the list have yields that are pretty low for dividend investors. That’s because investors tend to bid up companies that are consistent long-term performers.
Among the 64 companies on the current list, 49 yield less than 3%. The average yield for the entire list is 2.2%. But that’s still a bit better than the S&P 500, which presently yields only 1.7%.
However, the following seven companies currently yield at least 4%.
International Business Machines Corp. (NYSE: IBM) is the highest-yielding Dividend Aristocrat right now. The company currently yields 5.1%, and has raised its dividend for 26 consecutive years.
Walgreens Boots Alliance (NSDQ: WBA) is the largest retail pharmacy in both the United States and Europe. The company currently yields 5.0%, and has raised its dividend for 46 consecutive years.
Franklin Resources, Inc. (NYSE: BEN) is a global investment firm that, together with its subsidiaries, is referred to as Franklin Templeton. It currently yields 4.6% and has raised its dividend for 41 consecutive years.
Federal Realty Investment Trust (NYSE: FRT) is a real estate investment trust that invests in shopping centers in the Northeastern United States, the Mid-Atlantic states, California, and South Florida. This REIT currently yields 4.2%, and has raised its dividend for 50 consecutive years.
Realty Income Corporation (NYSE: O) is another REIT that invests in free-standing, single-tenant commercial properties in the United States, Spain and the United Kingdom. It currently yields 4.2%, and has raised its dividend for 50 consecutive years.
ExxonMobil (NYSE: XOM) is the largest of the integrated supermajor oil companies. It has seen its yield creep back above 4% (currently 4.0%) due to the recent pullback in oil prices. The company has raised its dividend for 38 consecutive years.
Finally, T. Rowe Price Group (NYSE: TROW) started the year yielding only 2.9%, but the financial sector has gotten hit hard this year. The decline in TROW’s share price has pushed the yield to 4.0%. The company has increased its dividend for 36 consecutive years.
I will close with the standard caveat that companies with the highest yields are also those at greatest risk of falling off the Dividend Aristocrats. A high yield generally means a decline in the underlying stock price. AT&T (NYSE: T) was the most recent example, as it came off the list this year.
Nevertheless, these are companies that have managed to raise their dividends during good times and bad, and are therefore pretty good bets for weathering future economic storms.
How do they do it? Because simply put, there is no substitute for what they sell.
Everyone buys it, even when money is tight. Including you. You might cancel that tropical vacation, but you're not going to stop paying for THIS. That nonstop demand is exactly why they’re kicking the tar out of regular stocks. In fact, since early 2000 they have beaten the S&P 500 by 1,428 points… and routinely produce income that crushes inflation… |
