September 28, 2020
By Rahul Iyer
Many investors focus on the dividend aristocrats because they are a somewhat guaranteed way to secure increasing dividend income payouts as well as overall returns. Dividend Aristocrats is a name given to S&P 500 companies with a long track record of increasing their dividends on an annual basis. This increase in dividends must be consistent over the last 25 years. Companies also must meet certain liquidity and trading frequency requirements in order to achieve the status of a Dividend Aristocrat.
At the time of the S&P 500 quarterly rebalancing date, equity is required to meet a daily trading value average of at least $5 million to be counted among the Dividend Aristocrats.
Investing in Dividend Aristocrats offer major benefits to investors. You could actively trade on your own and achieve higher total returns by watching short-term trends; however, the resources, the attention that will be needed to achieve this and potentially high trading fees may obliterate the advantages of this approach. Instead of doing this, you could choose to invest in Dividend Aristocrats and allow the power of long-term compounding to grow your investment portfolio.
Here are 5 of the best Dividend Aristocrats:
United Technologies Corporation
This company has been among the Dividend Aristocrats for more than a decade. The company has increased its dividends annually for 36 years. Since 1999, the United Technologies Corporation has increased its annual payout by 635%. The company boasts an average growth rate of over 10% per year over the last 20 years.
Air Products & Chemicals, Inc.
Like the United Technologies Corporation, Air Products & Chemicals, Inc. has increased its dividend payout amount consistently for the last 36 years. The company has increased its annual dividend distribution amount by more than 560% over the last 20 years. In terms of share price, the company has seen a five-fold growth since the Great Recession of 2008. The company’s share price has increased by almost 37% over the past year.
Target Corporation has consistently increased its dividends over the last 51 years. This company is also classified as a Dividend King. The company has also reported impressive asset appreciation over the last two years. Those who hold investments in the Target Corporation have more than doubled their investment over the past five years as they have experienced a total return of 105%.
Rowe Price Group, Inc.
For 32 years, the T. Rowe Price Group has consistently increased their annual dividend payout. Over the last 20 years, the company’s annual dividend payout has increased more than 15-fold.
PepsiCo has increased its annual dividend payouts every year since the last 47 years. The company has increased its annual dividend over seven-fold over the last 20 years. This means that they have reported an average growth rate of more than 10% per year. The company has seen a combined total return of over 62% over the last five years.
Investing in Dividend Aristocrats makes sense. As you invest in these companies, it’s a possibility that you will see great gains over the long-term. If you are a patient investor, Dividend Aristocrats offer a great opportunity.