S&P 500 Dividend Aristocrats

DEFINITION of 'S&P 500 Dividend Aristocrats'

Companies in the S&P 500 who have increased their dividends for at least 25 consecutive years. The S&P 500 Dividend Aristocrats index tracks their performance, and is mainly comprised of large, well-known blue-chip companies. Standard & Poors will remove companies from the index if they fail to increase their dividends from the previous year. The index is updated annually in January.

BREAKING DOWN 'S&P 500 Dividend Aristocrats'

In addition to consistently increasing dividends, dividend aristocrats must have a float-adjusted market capitalization of at least $3 billion and an average trading volume of at least $5 million. The list typically contains 40 to 50 companies.

The strength of the dividend aristocrats lies not just in their ability to continually increase dividend payments to shareholders, but in their overall performance. These companies have historically outperformed the S&P 500 by a little more than 1% per year and have been slightly less volatile.

Dividend aristocrats come from a wide variety of industries and sectors. Some companies have been dividend aristocrats for decades, such as Emerson Electric Co., which sells electronic products and engineering services predominantly to industrial clients. Others, such as Bemis Company, Inc., an industrial packaging products manufacturer, are relatively new to the list.

The recession of 2008–2009 caused many companies, such as Bank of America, General Electric and Pfizer, to be removed from the list. A company can be dropped from the list if it does not increase its dividend or if it is removed from the S&P 500.

One criticism of companies on the dividend aristocrats list is that they sometimes use share repurchases to facilitate dividend increases. The complaint is that a true dividend aristocrat should be increasing its overall payout to shareholders from year to year and, particularly if the company is overpaying for its shares, it may not be acting in shareholders’ best interests overall, even if dividends are going up.

RELATED TERMS
  1. Dividend Aristocrat

    A company that has continuously increased the amount of dividends ...
  2. Dividend

    A distribution of a portion of a company's earnings, decided ...
  3. Forward Dividend Yield

    An estimation of a year's dividend expressed as a percentage ...
  4. Dividend Yield

    A financial ratio that shows how much a company pays out in dividends ...
  5. Accelerated Dividend

    Special dividends paid by a company ahead of an imminent change ...
  6. Dividend Rate

    The total expected dividend payments from an investment, fund ...
Related Articles
  1. Mutual Funds & ETFs

    The 4 Best Indexes for Dividends

    Learn about some of the biggest dividend indexes in the marketplace and which niche of the dividend universe each of these indexes targets.
  2. Chart Advisor

    Now Is The Time To Invest In The Dividend Aristocrats

    Given their incredible track record, the dividend aristocrats represent some of the most stable companies in the world.
  3. Investing

    The Top 5 Companies Paying Dividends (JNJ, XOM)

    Explore analyses of the top five dividend-paying companies, and learn about their trailing 12-month dividend payouts and dividend payout ratios.
  4. Stock Analysis

    3 Blue Chip Stocks with Fat Dividends

    Discover what factors go into determining a great dividend stock, and learn about three large, stable companies that offer above-average yields.
  5. Investing Basics

    6 Rules for Successful Dividend Investing

    Dividend investing is a smart way to build wealth but there are some important rules investors must remember in order to maximize value.
  6. Stock Analysis

    5 Dividend Growth ETFs to Consider (NOBL,REGL)

    These five ETFs track some of the most consistent dividend-growth companies in the world.
  7. Investing Basics

    5 Reasons Why Dividends Matter to Investors

    Learn five of the primary reasons why dividends are of significant importance for the overall performance of stock market investments.
  8. Investing

    The 3 Biggest Misconceptions of Dividend Stocks

    To find the best dividend stocks, focus on total return, not yield.
  9. Investing Basics

    The Importance of Dividends in Your Portfolio

    Learn some of the primary reasons why dividends constitute a critical factor in the overall performance of a stock investor's portfolio.
  10. Options & Futures

    Stock-Picking Strategies: Income Investing

    Income investing, which aims to pick companies that provide a steady stream of income, is perhaps one of the most straightforward stock-picking strategies. When investors think of steady income ...
RELATED FAQS
  1. Which is better a cash dividend or a stock dividend?

    The purpose of dividends is to return wealth back to the shareholders of a company. There are two main types of dividends: ... Read Answer >>
  2. Can dividends be paid out monthly?

    Find out if stocks can pay dividends monthly, and learn about the types of companies most likely to do so and how monthly ... Read Answer >>
  3. What is the difference between yield and dividend?

    Learn how to differentiate between dividend yield and dividend return, and see why dividend yield is the more popular rate ... Read Answer >>
  4. Does the S&P 500 index include dividends?

    Learn about dividend payments and the S&P 500 and how the yield on the index has trended lower over time due to changes in ... Read Answer >>
  5. Can I receive dividends on ordinary shares of a company?

    Understand the basics of collecting dividend payments on ordinary shares, including when dividends can be paid and under ... Read Answer >>
  6. What types of companies offer the most dividends?

    Find out which types of companies tend to offer the most dividends, and learn why dividends must be considered carefully ... Read Answer >>
Hot Definitions
  1. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  2. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  3. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  4. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
  5. Generally Accepted Accounting Principles - GAAP

    The common set of accounting principles, standards and procedures that companies use to compile their financial statements. ...
  6. DuPont Analysis

    A method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are ...
Trading Center