Increase your income with the Dividend Aristocrats index.
Dividend Investing
If you are currently investing for dividends, passive income, or have any plans to begin dividend investment then you should sit down and familiarize yourself with the Dividend Aristocrats. No, these are not cats that pay dividends nor are they snobby men that hand out money, it is an index of stocks that have something in common: they pay dividends, they do it consistently, and they consistently increase the payout.
To be more specific, the companies on this list have paid dividends for the last 25 years, they have raised their dividends for the past 25 years and at no point have they suspended or decreased payout. If you are wondering why this list is so important then you first need to understand the concept of yield on cost.
Yield On Cost
In short, your yield will continue to grow on your original cost of investment. If you buy a stock for $10.00 today with a dividend of 30 cents a year, then you fast forward 10 years and the dividend is now at 90 cents! A measly 3% dividend yield is now at a more beefy 9% yield on cost! Who wouldn’t love to have a savings account yielding 9%? Good luck finding it, but investing this way is pretty close risk-wise.
Dividend Aristocrats Index List 2010
So what stocks are in this magical little index? This Dividend Aristocrats Index 2010 list is current as of August 2010. Please view below:
| Company Name | Ticker |
| 3M Co | MMM |
| AFLAC Inc | AFL |
| Abbott Laboratories | ABT |
| Air Products & Chemicals Inc | APD |
| Archer-Daniels-Midland Co | ADM |
| Automatic Data Processing | ADP |
| Bard, C.R. Inc | BCR |
| Becton, Dickinson & Co | BDX |
| Bemis Co Inc | BMS |
| Brown-Forman Corp B | BF/B |
| CenturyLink Inc | CTL |
| Chubb Corp | CB |
| Cincinnati Financial Corp | CINF |
| Cintas Corp | CTAS |
| Clorox Co | CLX |
| Coca-Cola Co | KO |
| Consolidated Edison Inc | ED |
| Dover Corp | DOV |
| Emerson Electric Co | EMR |
| Exxon Mobil Corp | XOM |
| Family Dollar Stores Inc | FDO |
| Grainger, W.W. Inc | GWW |
| Integrys Energy Group Inc | TEG |
| Johnson & Johnson | JNJ |
| Kimberly-Clark | KMB |
| Leggett & Platt | LEG |
| Lilly, Eli & Co | LLY |
| Lowe’s Cos Inc | LOW |
| McDonald’s Corp | MCD |
| McGraw-Hill Cos Inc | MHP |
| PPG Industries Inc | PPG |
| PepsiCo Inc | PEP |
| Pitney Bowes Inc | PBI |
| Procter & Gamble | PG |
| Sherwin-Williams Co | SHW |
| Sigma-Aldrich Corp | SIAL |
| Stanley Black & Decker | SWK |
| Supervalu Inc | SVU |
| Target Corp | TGT |
| VF Corp | VFC |
| Wal-Mart Stores | WMT |
| Walgreen Co | WAG |
There are quite a few household names on that list. That is because, generally, companies that can afford to consistently payout and raise dividends are well-managed, well-established businesses. Many of them have pioneered their industry or become the dominant force. Throughout the next couple of months we are going to slowly be building up a series about this particular index. You will be able to look forward to a more in-depth analysis on some of the companies that are listed as we continue forward.
Honorable Mentions:
- Financial Samurai reminds the employed of how lucky we really are!
- Kris @ Everyday Tips and Thoughts Discovered Freeganism!
- Not Made of Money mentioned The Wealth Artisan in their carnival!
- Kevin @ Invest It Wisely mentioned us in his article about shopping for a home.
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I still think that “yield on cost” leaves out the opportunity cost (you’re not considering the additional money sitting in there). If your yield on cost is 9% but your yield on equity is only 1%, you could do better by buying a guaranteed deposit.
Nonetheless, thanks for the mention
Hey There Kevin,
Eventually the yield on cost would grow enough that it would outpace the yield using another opportunity. A good example is Coca-Cola. Right now you’ll get about 3.1% dividend yield. Let’s say you bought $1,000.00 in KO rather than grabbing a 5% 10 year CD. You’ll lose about 1.9% at first, but if the yield on cost exceeds 5% in a few years, then eventually you’ll recoup the lost opportunity and exceed the yield.
Hopefully I addressed that well enough
It’s always a pleasure chatting Kevin, thanks for stopping in!
Thanks,
Timothy
Hi
Up until a couple of months ago I imagine BP would have fallen into that group. The other thought I have is how many of the original Dow Jones Companies still exist today.
Personally, I don’t buy individual stocks. It’s low cost index tracking funds for me whenever possible.
Hi There RIT,
BP lowered their dividends in the early 90s, so they have a few years to go. I imagine that they’ll be forced to cut their dividend or suspend it soon as I can’t imagine their cashflows will allow them to sustain it at its current level. Only time will tell. I generally agree with you about the index funds. The fees are generally reasonable and you get the built in diversity. I like the Dividends Aristocrats because it tends to filter out weaker companies. It’s hard to sustain dividends for 25 years if you can’t afford it. Thanks for dropping in, I love hearing what other people like doing!
Thanks,
Timothy