The S&P 500 Dividend Aristocrats Index is a very prestigious and popular index among dividend investors. The Index measures the performance of blue-chip S&P 500 companies that have increased their dividends for at least 25 consecutive years. The large-cap companies in this index must also have an average daily trading volume of at least $5 Million for the six months prior to the index reference date.
In a previous article, we have already indicated that the Dividend Aristocrats Index beat the S&P 500 index over the past 1, 3, 5 and 7 years. Since the beginning of 2011, the companies in the S&P 500 Dividend Aristocrats Index returned 9.44 % vs. 7.60% gain for the SPY.Average dividend pay-out ratio of all 42 stocks in the S&P 500 Dividend Aristocrats Index is 42%, while the average dividend yield of all 42 stocks is 2.58%. (The market data are sourced from Standard & Poor's and Fidelity.)
As we are concerned about the Fed’s loose monetary policy, we believe investors should protect themselves against inflation. We think the Dividend Aristocrats that are able to increase dividends are attractive options for defensive investors that demand better risk-return combination and some inflation protection.
Below, we compiled a list of 21 stocks from the S&P 500 Dividend Aristocrats Index and showed how they have performed this year:
Dividend Yield | Dividend Payout Ratio | YTD Return | ||
CenturyLink Inc | 7.12% | 86% | -8.78% | |
Cincinnati Financial Corp | 5.44% | 95% | -4.79% | |
Consolidated Edison Inc | 4.42% | 69% | 11.58% | |
Abbott Laboratories | 3.44% | 44% | 13.87% | |
Clorox Co | 3.29% | 53% | 9.83% | |
Bemis Co Inc | 2.74% | 46% | 6.43% | |
Coca-Cola Co | 2.65% | 52% | 6.05% | |
Automatic Data Processing | 2.58% | 60% | 20.55% | |
AFLAC Inc | 2.49% | 21% | -15.08% | |
Chubb Corp | 2.44% | 26% | 7.08% | |
Emerson Electric Co | 2.36% | 51% | 2.94% | |
3M Co | 2.19% | 37% | 14.88% | |
Air Products & Chemicals Inc | 2.19% | 43% | 8.89% | |
Exxon Mobil Corp | 2.17% | 29% | 13.87% | |
Archer-Daniels-Midland Co | 2.04% | 20% | 2.18% | |
Becton, Dickinson & Co | 1.78% | 33% | 7.24% | |
Brown-Forman Corp B | 1.65% | 32% | 10.42% | |
Dover Corp | 1.58% | 32% | 20.52% | |
Cintas Corp | 1.44% | 33% | 22.03% | |
Ecolab Inc | 1.20% | 29% | 13.10% | |
Bard, C.R. Inc | 0.64% | 13% | 23.94% | |
AVERAGE | 2.66% | 43% | 8.89% | |
SPY | 7.60% | |||
Since the beginning of this year, the average YTD return of these 21 stocks was 8.89% vs. 7.60% for the SPY. All these stocks except two – CTL and CINF – have dividend payout ratio of less than 75%. The average dividend pay-out ratio of those stocks is 43% and the average dividend yield is 2.66%.
Here are the 10 highest dividend yielding stocks in our list:
CenturyLink Inc. (CTL): CenturyLink Inc. is a leading integrated communications company providing Internet services in the United States. CTL recently traded at $40.71 and has a 7.12% dividend yield. CTL lost -8.78% since the beginning of this year. The stock has a market cap of $24.45B and a P/E ratio of 13.66. Steven Cohen had more than $200 Million in CTL at the end of March 2011. (See Steven Cohen’s other top holdings)
Cincinnati Financial Corp. (CINF): Cincinati Financial Corp. is a U.S. insurance company specialized in property casualty insurance. CINF has a 5.44% dividend yield, but lost -4.79% since the beginning of this year. The stock has a market cap of $4.74B and a P/E ratio of 12.81. Jean-Marie Eveillard’s First Eagle holds the largest CINF position among the 300+ funds we are tracking.
Consolidated Edison Inc. (ED): Consolidated Edison Inc. is an energy company providing electric, gas and steam utility services in the United States. ED has a 4.42% dividend yield and returned 11.58% since the beginning of this year. The stock has a market cap of $15.81B and a P/E ratio of 14.49. Michael Messner and Jim Simons are among ED investors.
Abbott Laboratories (ABT): Abbott Laboratories is a multinational pharmaceutical company. ABT has a 3.44% dividend yield and returned 13.87% since the beginning of this year. The stock has a market cap of $83.22B and a P/E ratio of 18.66. Ken Fisher had more than $400 Million in ABT at the end of March 2011. (See Ken Fisher’s Favourite stocks here)
Clorox Co (CLX): Clorox Co. is a global company providing chemical and food products worldwide. CLX has a 3.29% dividend yield and returned 9.83% since the beginning of this year. The stock has a market cap of $9.11B and a P/E ratio of 33.67. Carl Icahn’s Icahn Capital had $700 Million in CLX at the end of March (Check out Carl Icahn’s other top stocks).
Bemis Co Inc. (BMS): Bemis Co Inc. is a U.S. company supplying flexible and pressure sensitive packaging products in the United States. BMS has a 2.74% dividend yield and returned 6.43% since the beginning of this year. The stock has a market cap of $3.61B and a P/E ratio of 16.87. Chuck Royce and Jim Simons are among BMS investors.
Coco-Cola Co. (KO): Coca Cola Co. is a large U.S. company providing non-alcoholic beverages worldwide. KO has a 2.65% dividend yield and returned 6.05% since the beginning of this year. The stock has a market cap of $157.39B and a P/E ratio of 13.27. Warren Buffett has a massive $13 Billion holding in KO.
Automatic Data Processing (ADP): Automatic Data Processing is one of the leading providers of integrated computing services in the world. ADP has a 2.58% dividend yield and returned 20.55% since the beginning of this year. The stock has a market cap of $27.49B and a P/E ratio of 22.46. Jean-Marie Eveillard’s First Eagle holds more than $150 Million of ADP.
AFLAC Inc (AFL): AFLAC Inc. is a U.S. company providing supplemental insurance services. AFL has a 2.49% dividend yield but lost -15.08% since the beginning of this year. The stock has a market cap of $22.17B and a P/E ratio of 10.65. Bill Miller had nearly $200 Million in AFL at the end of March 2011.
Chubb Corp. (CB): Chubb Corp. is one of the largest insurance companies in the United States. CB has a 2.44% dividend yield and returned 7.08% since the beginning of this year. The stock has a market cap of $18.44B and a P/E ratio of 8.87. Both Ken Griffin and Steven Cohen have more than $100 Million in CB.
Disclosure: I am long CTL.
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