What Are Dividend Aristocrats?

Introduction

Some companies have increased their dividend payments every single year for decades, through recessions, wars, and market crashes. These elite companies are known as dividend aristocrats.

What Is a Dividend Aristocrat?

A dividend aristocrat is a company in the S&P 500 that has increased its dividend for at least 25 consecutive years. The list includes well-known companies like Coca-Cola, Johnson and Johnson, Procter and Gamble, and Walmart. Companies with 50 or more years of increases are sometimes called dividend kings.

Why Investors Love Them

Raising dividends for decades requires steady profits and strong management. Many dividend aristocrats are mature businesses with loyal customers and reliable cash flow. For investors seeking income, growing dividends can help keep up with inflation over time. There are even ETFs that hold the entire group of aristocrats.

Things to Keep in Mind

A long history of dividend increases does not guarantee the future. Companies can fall off the list if they cut or freeze their dividend, as some did during the 2008 financial crisis and the pandemic. Dividend aristocrats also tend to be slower-growing companies, so they may lag behind the market during big rallies led by tech stocks.

Conclusion

Dividend aristocrats show the power of consistency in investing. They are a great example of how patient investors can be rewarded year after year!