One of the best places to find a quality list of dividend paying stocks is by referencing the S&P 500 Dividend Aristocrats. This published list has some of the absolute best dividend paying stocks that an investor can find today. It can be referred to as the “Holy Grail” for most experienced dividend investors and should be leveraged by any new investor.
S&P Dividend Aristocrats Criteria
In order to be included in the list of S&P 500 Dividend Aristocrats, a company must meet a list of strict requirements. Here are just a few of the high level requirements that a company must meet to be included in the list of dividend paying stocks -
- Must be a member of the S&P 500.
- Must have increased dividends every year for at least 25 consecutive years.
For additional information on the specific criteria used, check out the identified list of resources listed below.
The list of dividend paying stocks that are included in the dividend aristocrats is reviewed after each quarter. A company will be removed from the list if the following criteria is NOT met during this review –
- Quarterly Review – Any company who is removed from the S&P 500 will be dropped from the list of dividend aristocrats at the end of each quarter.
- Annual Review – Each December during the annual review, a company that did not increase their calendar year dividends compared to the prior year will be dropped from the list. This includes companies who make a dividend cut or who make no changes in their dividend distributions.
Use S&P Dividend Aristocrats Cautiously
While using this list of dividend paying stocks is an essential step in building a solid and diversified portfolio, it should be done with caution. Since the list will only drop stocks who have made a dividend cut each December, the current list may include companies that won’t exist on the list at the end of the year.
In recent memory, many banking stocks would have fallen into this category. Several banking stocks (prior to the recent financial recession) were some of the top dividend paying stocks around. During the economic downturn, many of these companies were forced to slash their dividends in an attempt to hold onto any cash they may have had. Reviewing this list in the middle of the year may have led to an inaccurate assumption.
It is very important to remember that an investor always completes their due diligence on a stock before making a purchase. Using investment tools like the S&P dividend aristocrats list can really help guide your investment decisions. Just remember that using this list (or any others) should only make up part of your analysis!
S&P Dividend Aristocrats Resources
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