Dividend Aristocrats are the Best Way to Grow Your Income. And You Can Own Them All with One ETF.
If you like dividend-paying stocks, you have to know about the Dividend Aristocrats. The Dividend Aristocrats are a select group of companies that have increased their dividends every year for at least 25 straight years. There are currently 65 stocks on the Dividend Aristocrats list, which is compiled annually from the stocks in the S&P 500. S&P also offers a Dividend Aristocrats ETF, the ProShares S&P 500 Dividend Aristocrats ETF (NOBL).
The Dividend Aristocrats ETF currently yields 1.87%, and provides broad exposure to an exclusive group of high-quality, blue-chip stocks. Most are from established industries, like consumer staples and industrials, and 87% are large-cap stocks.
Buying the Dividend Aristocrats ETF is an easy way to secure an income stream that rises every year, and get broad exposure to American large-cap stocks, with a bit of an old-economy bias.
Here’s a table of the 20 largest holdings of the ProShares Dividend Aristocrats ETF. The holdings are updated daily and are available here.
However, you may want to be more selective, and buy individual Dividend Aristocrats rather than buying the whole ETF. For example, you may want to focus on stocks from the strongest stock market sectors, or keep your portfolio balanced by selecting one or two Aristocrats from each sector.
If you have shorter-term gains in mind, you may only want buy the Dividend Aristocrats with the best earnings growth, or strongest charts.
The Best Dividend Aristocrats for Growth
The following Dividend Aristocrats have both strong charts with good momentum, and positive revenue and earnings growth expectations.
Chevron (CVX): 49% sales growth expected this year; stock up 36.6% YTD
Exxon Mobil (XOM): 45.9% sales growth expected this year; stock up 48.7% YTD
Lowe’s (LOW): 2.1% sales growth, 24% EPS growth expected this year; stock up 56.3% YTD
Target (TGT): 8.8% sales growth, 30% EPS growth expected this year; stock up 41.1% YTD
Highest-Paying Dividend Aristocrats
Finally, if you invest primarily for current income, you may be interested to know which of the Dividend Aristocrats offer the highest yields. Today, Dividend Aristocrats offering the five highest yields are:
1. AT&T (T): 8.7% yield
2. Exxon Mobil (XOM): 5.7% yield
3. International Business Machines (IBM): 5.5% yield
4. AbbVie (ABBV): 4.8% yield
5. Chevron (CVX): 4.6% yield
Aside from the two big oil stocks, you’ll notice that this list is different from the one above it—the highest-yielding aristocrats don’t always have particularly strong charts or growth prospects.
When selecting individual stocks for your portfolio, even from the exclusive list of Dividend Aristocrats, it’s important to balance desire for yield against other qualifications.
Fortunately, my Cabot Dividend Investor advisory has a bit of both! My portfolio, currently comprised of 18 stocks, one ETF and one bond, features three tiers of dividend stocks: a high-yield tier, a safe income tier and a dividend growth tier, which features Dividend Aristocrats like the ones I just mentioned. To find out which ones I’m currently recommending, click here.
Which Dividend Aristocrats do you hold in your portfolio?
Tom Hutchinson, Chief Analyst of Cabot Dividend Investor, is a Wall Street veteran with extensive experience in multiple areas within the financial world. His advisory is geared to providing you both high income and peace of mind. If you’re retired or thinking about retirement, this advisory is designed for you.Learn More
*This post has been updated from an original version, published in 2018.