Business & Investment

These 12 “dividend aristocratic” stocks were the highest-income formulators in five years

Stock market investors usually want to make as much money as possible in anticipation of industry events and corporate success. But when the New Year begins, looking back can be helpful, especially if you’re looking for dividend income.

One of the risks of choosing a stock by dividend yield is to fall into a “value trap”. This can be a mature company with very slow growth. Some of these companies focus on financial performance rather than increasing sales and entering new product and service categories.

A better approach may be to increase dividend income over time. There are many examples of companies that had a modest (decent) dividend yield five years ago, but have significantly increased dividend payments since then, and are now higher for loyal investors.

The following is an example from the S & P 500 Dividend Aristocratic Index.
XX: SP50DIV..

This index consists of 65 companies from the Benchmark S & P500 Index.
SPX

Dividends on common stock have increased for at least 25 consecutive years.

This is the only criterion for inclusion as an aristocrat — there is no difference in how high the current yield of a stock is. The idea is that increasing dividends consistently demonstrates a commitment to the interests of our shareholders and can lead to good performance. You can invest in dividend aristocrats as a group through the ProShares S & P 500 Dividend Aristocrats ETF.
NOBL..

Dividend cuts can be terrible for equity performance, giving investors some reassurance from the 25-year history of dividend increases. But even aristocrats may reduce their payments. AT & T Inc.
T

It is still included in the S & P 500 Dividend Aristocrats Index because it has not yet made the announced dividend cuts planned after completing a spin-off of the WarnerMedia business under a contract with Discovery.
DISCA

That is Announced in May.. AT & T shares fell 8% in 2021 and dividends were reinvested. Only 12% of the S & P 500 decreased annually.

Moreover, steadily increasing dividends do not guarantee better performance than the market. In the last five years, only about one-third of today’s dividend aristocrats have done so.

read: These are the highest performing S & P500 and Nasdaq-100 strains in 2021.

As an example of the S & P 500 Dividend Aristocrat’s Dividend Compound Interest, consider the performance of your five-year investment in the T Rowe Price Group.
TROW

:

  • On December 31, 2016, the stock closed at $ 75.26. At that time, the annual dividend rate was $ 2.16 per share and the dividend yield was 2.87%.

  • At the closing price on December 31, 2021, T. Rowe Price’s share price was $ 196.64 and the annual dividend rate rose to $ 4.32. The current yield on stocks was 2.20%, but the yield on stocks held for five years will be 5.74%.

  • In those five years, T. RowePrice’s share price rose 161%, and according to FactSet, the total return on shares when reinvesting dividends was 203%.

  • The compound annual growth rate (CAGR) of the T. Rowe Price dividend for that period was 14.9%.

In the example above, the yield numbers are not extreme and the current yield on stocks is lower than it was five years ago. Again, T. If you hold RowePrice for 5 years, you can use the purchase price to get a higher dividend yield. Also, the five-year price increase was 161%, compared to the 113% increase in the S & P 500. Meanwhile, T. Rowe Price’s five-year total return is 203%, compared to 133% for the S & P 500.

The “best” dividend compounder of the S & P 500 Dividend Aristocrats

Starting with the current list of 65 dividend aristocrats, this is the highest 5-year CAGR of the annual dividend rate, with a dividend yield of at least 2.00% at the end of 201612.

society

Ticker

5-year dividend CAGR

Dividend yield of stocks purchased 5 years ago

Dividend Yield – 5 Years Ago

Current dividend yield

Price change-5 years

Total return-5 years

AbbVie

AbbVie

17.1%

9.01%

4.09%

4.17%

116%

172%

T. Rowe Price Group Inc.

TROW

14.9%

5.74%

2.87%

2.20%

161%

203%

Illinois Tool Works Co., Ltd.

ITW

13.4%

3.98%

2.12%

1.98%

102%

127%

Aflac Co., Ltd.

AFL

13.2%

4.60%

2.47%

2.74%

68%

89%

Automatic Data Processing Co., Ltd.

ADP

12.8%

4.05%

2.22%

1.69%

140%

167%

Abbott Laboratories

ABT

12.1%

4.89%

2.76%

1.34%

266%

300%

NextEra Energy Inc.

NEE

12.1%

5.16%

2.91%

1.65%

213%

252%

Air Products and Chemicals Inc.

APD

11.8%

4.17%

2.39%

1.97%

112%

138%

McCormick and Company Inc.

MKC

9.5%

3.17%

2.01%

1.53%

107%

125%

Atmos Energy Corp.

ATO

8.6%

3.67%

2.43%

2.60%

41%

58%

Target Co., Ltd.

target

8.4%

4.98%

3.32%

1.56%

220%

269%

McDonald’s

MCD

8.0%

4.53%

3.09%

2.06%

120%

149%

Source: FactSet

Click on the ticker for more information on each company.click here Tomi Kilgore’s detailed guide to the wealth of information on the MarketWatch quotes page.

To be sure, all dividend aristocrats were not good performers. The list above includes many of the best performing dividend aristocrats on a total return basis. Of the 65 components of the index, only 21 have exceeded the total return of the S & P 500 in the last five years.

Invest in dividend aristocrats as a group

Did the dividend aristocrats as a group perform better than the S & P 500 over a very long period of time? This is a comparison of the average annual earnings of the S & P 500 Dividend Aristocrats and the full S & P 500 for various periods through the end of 2021.

Average annual revenue

index

5 years

Decade

15 years

20 years

25 years

30 years

S & P 500 Dividend Aristocrat

15.7%

15.4%

11.7%

11.2%

11.5%

11.8%

S & P 500

18.5%

16.6%

10.7%

9.5%

9.8%

10.6%

Source: FactSet

Over the last 5 and 10 years, the complete S & P 500 Index has outperformed the S & P 500 Dividend Aristocrats. However, aristocrats as a group outperform for longer periods of time.

Do not miss it: Favorite stocks of Wall Street analysts in 2022 include Alaska Airlines, Caesars and Lithia Motors

These 12 “dividend aristocratic” stocks were the highest-income formulators in five years

http://www.marketwatch.com/news/story.asp?guid=%7B20C05575-04D4-B545-782F-AC5C55B6C872%7D&siteid=rss&rss=1 These 12 “dividend aristocratic” stocks were the highest-income formulators in five years

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