Dividend Aristocrats, Kings & Other Stock Market Royalty (2023)

When it comes to investing, most of my money is in a Vanguard fund or ETF. It’s not nearly as simple as a three-fund portfolio but it’s pretty close. However, there is a little piece of it in some stocks because we all need to live a little.

To scratch that stock picking itch in the most responsible way possible, I built a dividend growth portfolio. It’s nothing flashy, but after ten years, it’s grown considerably. It now provides a nice monthly cash flow even though I didn’t design it to be a monthly dividend paycheck!

I didn’t pick any old dividend funds, I started with dividend royalty.

🔃 Updated January 2024 with the changes to the list. Walgreens Boots Alliance (WBA) was removed and Fastenal (FAST) was added. The total list remains at 67.

What are Dividend Aristocrats?

Dividend Aristocrats are companies in the S&P 500 that have increased their dividends every year for twenty-five years straight. The list itself is maintained by the S&P and updated every year.

Consider the criteria for a second – the companies on the list have all increased their dividends each year for at least twenty-five years. If your company only maintains the dividend, you drop off the list. If you pause the dividend, see you in 25 years buddy. You have to increase it each year (if only by a penny) and you can’t miss it for at least twenty-five years.

It’s a high bar.

If you think back to all the financial and economic events of the last twenty-five years, they include Covid-19 pandemic and subsequent inflationary cycle, the 2008-2010 Great Recession as well as the 2001 Dot-Com Bust. In fact, in 2009, nine companies fell from the Dividend Aristocrats list (two were added, Bemis and Leggett & Platt). In 2010, ten more fell with only one addition (Brown Forman).

Which Companies are Dividend Aristocrats?

For 2024, the number of Dividend Aristocrats remained at 67 but there was a change – Walgreens Boots Alliance (WBA) was removed and Fastenal (FAST) was added. (last year, V.F. Corp was removed and Kenvue was added)

Here is the full list of Dividend Aristocrats as of January 2024:

1. AbbVie Inc. (ABBV)
2. Abbott Laboratories (ABT)
3. Archer-Daniels-Midland Co. (ADM)
4. Automatic Data Processing Inc. (ADP)
5. Aflac Inc. (AFL)
6. Albemarle Corp (ALB)
7. Amcor PLC (AMCR)
8. A.O. Smith (AOS)
9. Air Products and Chemicals Inc. (APD)
10. Atmos Energy Corp (ATO)
11. Becton, Dickinson and Co. (BDX)
12. Franklin Resources Inc. (BEN)
13. Brown-Forman Corp. B (BF.B)
14. Brown & Brown (BRO)
15. Cardinal Health Inc. (CAH)
16. Caterpillar Inc. (CAT)
17. Chubb Ltd. (CB)
18. Church & Dwight Co. (CHD)
19. C.H. Robinson Worldwide (CHRW)
20. Cincinnati Financial Corp. (CINF)
21. Colgate-Palmolive Co. (CL)
22. The Clorox Co. (CLX)
23. Cintas Corp. (CTAS)
24. Chevron Corp. (CVX)
25. Dover Corp. (DOV)
26. Ecolab Inc. (ECL)
27. Consolidated Edison Inc. (ED)
28. Emerson Electric Co. (EMR)
29. Essex Property Trust, Inc. (ESS)
30. Expeditors International (EXPD)
31. Fastenal (FAST) – new for 2024
32. Federal Realty Investment Trust (FRT)
33. General Dynamics Corp. (GD)
34. Genuine Parts Co. (GPC)
35. W.W. Grainger Inc. (GWW)
36. Hormel Foods Corp. (HRL)
37. International Business Machines (IBM)
38. Illinois Tool Works Inc. (ITW)
39. Johnson & Johnson (JNJ)
40. Kimberly-Clark Corp. (KMB)
41. The Coca-Cola Co. (KO)
42. Kenvue (KVUE)
43. Linde PLC (LIN)
44. Lowe’s Companies Inc. (LOW)
45. McDonald’s Corp. (MCD)
46. Medtronic plc (MDT)
47. McCormick & Co. Inc. (MKC)
48. 3M Co. (MMM)
49. Nordson Corp (NDSN)
50. NextEra Energy (NEE)
51. Nucor Corp. (NUE)
52. Realty Income Corporation (O)
53. PepsiCo Inc. (PEP)
54. The Procter & Gamble Co. (PG)
55. Pentair plc (PNR)
56. PPG Industries Inc. (PPG)
57. Roper Technologies (ROP)
58. Sherwin-Williams (SHW)
59. J.M. Smucker (SJM)
60. S&P Global (SPGI)
61. Stanley Black & Decker Inc. (SWK)
62. Sysco Corp. (SYY)
63. Target Corp. (TGT)
64. T. Rowe Price Group Inc. (TROW)
65. Walmart Inc. (WMT)
66. West Pharmaceutical Services (WST)
67. Exxon Mobil Corp. (XOM)

The S&P keeps an official list of the Dividend Aristocrats because they have a fund for it – SPDAUDP.

The best ticker award has to go to ProShares and their S&P 500 Dividend Aristocrats ETF – NOBL. You can see their holdings.

Dividend Kings

If you thought that becoming a Dividend Aristocrat was difficult, wait until you hear what it takes to be a Dividend King.

To be a Dividend King, you must have fifty years of increasing dividends. This list is naturally a subset of the Dividend Aristocrats:

1. ABM Industries, Inc. (ABM)
2. American States Water Co. (AWR)
3. Commerce Bancshares, Inc. (CBSH)
4. Cincinnati Financial Corp. (CINF)
5. Colgate-Palmolive Co. (CL)
6. California Water Service Group (CWT)
7. Dover Corp. (DOV)
8. Emerson Electric Co. (EMR)
9. Farmers & Merchants Bancorp (FMCB)
10. Federal Realty Investment Trust (FRT)
11. Genuine Parts Co. (GPC)
12. Hormel Foods Corp. (HRL)
13. Johnson & Johnson (JNJ)
14. The Coca-Cola Co. (KO)
15. Lancaster Colony Corp. (LANC)
16. Lowe’s Cos., Inc. (LOW)
17. 3M Co. (MMM)
18. Nordson Corp. (NDSN)
19. Northwest Natural Gas (NWN)
20. Procter & Gamble Co. (PG)
21. Parker-Hannifin Corp. (PH)
22. Stepan Co. (SCL)
23. SJW Group (SJW)
24. Stanley Black & Decker, Inc. (SWK)
25. Tootsie Roll Industries, Inc. (TR)
26. Altria Group, Inc. (MO)
27. H.B. Fuller (FUL)
28. Sysco Corp (SYY)
29. Universal Corp (UVV)
30. National Fuel Gas (NFG)
31. Black Hills Corp (BKH)

If you look back at all the economic turmoil in the last fifty years, we’ve had several massive upheavals. You take all the chaos of the last twenty-five years and then add another twenty-five years. We now stretch into the recession of the early-1980s and the oil crisis of the late 1970s!

As an aside, one of the surprising facts about investing is that corrections are not uncommon – they happen all of the time (average is once a year).

Dividend Champions

Dividend Champions is a similar list (25 years of increased dividends) but the list is longer for two reasons:

• Champions include companies not in the S&P 500.
• The Aristocrats list is updated annually whereas Champions are updated monthly.

Whereas the Aristocrats are around sixty-ish companies and Kings is around thirty-ish, the Champions list is over a hundred. (135 as of this writing)

I find that the best list of Dividend Champions can be found at the DRiP Investing Resource Center.

Canadian Dividend Aristocrats

The lists above are all companies based in the United States but similar lists exists for companies based in Canada (technically, for companies listed on the Toronto Stock Exchange). For the Canadian dividend aristocrats, the company must follow these rules:

• Have a market capitalization of at least $300 million
• Increase dividends for five consecutive years
• Must be listed on the Toronto Stock Exchange and be a member of the S&P Canada BMI

As you can see, the rules are slightly more relaxed compared to the U.S. list (only 5 years of increased dividend vs. 25). If you want to invest in the group, there’s an iShares ETF that invests in Canadian dividend aristocrats called iShares S&P/TSX Canadian Dividend Aristocrats Index ETF (CDZ).

My sense is that five years is a little too short of a time period to act as a good filter. I might start with lists of the best Canadian dividend stocks and analyze each company, rather than start with dividend aristocrats.

Are They Good Investments?

Much like other named groups of companies, like Dogs of the Dow, these are good starting points, but you shouldn’t just take the list and invest as is.

There have been several backdated tests of investing in dividend royalty and depending on the period, they can do better or worse than the S&P 500 as a whole.

My goal in starting my analysis with dividend royalty isn’t to beat the S&P 500. In fact, I’m not trying to beat anything. I’m trying to build a portfolio that can provide predictable cash flow so it can supplement my entrepreneurial pursuits. If you’re comparing them with the S&P 500, I think you’re playing the wrong game by using the dividend aristocrats or kings as your starting point.

If you want growth, you should be investing in companies that pay zero dividends. You want companies who have opportunities to invest their cash and not have it leave the company as dividends. By retaining those earnings and investing in projects, they create potential future growth opportunities. Dividends are great for investors who want cash but bad for the companies who want to grow. Some would say that paying dividends is a sign the company doesn’t have something better to invest in, which is a bad sign for growth.

How to Buy Dividend Aristocrat Stocks

There are two basic ways to buy Dividend Aristocrats stocks: buy them directly or through an exchange traded fund (ETF).

Buying all 65 Dividend Aristocrats stocks, though possible using fractional shares, is impractical. Managing a portfolio of that money stocks could easily turn into a part-time job.

As I’ve shown above, the companies that make up the Dividend Aristocrats changes. Each year a small number of companies fall out, and a roughly equivalent number are added. Making those changes on an annual basis won’t be especially difficult. But maintaining target allocations of the stocks will be a complicated process. You’ll need to rebalance your portfolio every few months, since the value of each stock in the portfolio will change.

A better strategy, if you want to hold individual stocks directly, will be to select maybe eight or 10 out of the 65. That’ll give you an opportunity to invest in the companies you consider to be most attractive, while also cutting down on the project that managing 65 stocks will create.

The Better Way to Hold All 65 Dividend Aristocrats Stocks

If you do want to invest in all 65 stocks, you can do it through Dividend Aristocrats EFTs. They hold all the stocks on the list, and handle portfolio management and rebalancing for you.

Examples of top ETFs includes:

• FT CBOE Vest S&P 500® Dividend Aristocrats Target Income ETF® (KNG)
• ProShares S&P 500 Dividend Aristocrats (NOBL)

Whether you choose to invest in individual companies or in a Dividend Aristocrats ETF, you can purchase your positions commission-free through brokers like Robinhood and Webull.

If you prefer having your portfolio professionally managed, you can invest in either Dividend Aristocrats stocks or ETFs using a robo-advisor, like M1 Finance. Since they allow you to choose your own investments, whether stocks for ETFs, you can build a portfolio of Dividend Aristocrats that will be fully managed by M1 Finance free of charge.

Past Performance

You know what they say about past performance not being indicative of future returns… companies are on the list until they’re not. It’s not uncommon for companies who have been on the list for many years to find themselves in bad situations.

So they offer a good starting point, but you should still do your due diligence to decide which companies to invest in.

Summary

If you want to add an income component to your stock portfolio, Dividend Aristocrats are one of the best ways to do that. Not only do they provide steady income from the dividends they pay, but they also have a long track record of respectable capital gains.

No, they won’t produce the kinds of capital gains you’ll get from growth stocks. But in addition to the income they provide, they can also add stability to your portfolio. That’s because dividend paying stocks tend to weather market downturns better than growth stocks. That’s especially true of Dividend Aristocrats, because they represent some of the biggest and best-established companies in the country.

Are Dividend Aristocrats for everyone? Maybe not. But they’re a pretty safe bet if you’re looking for that rare combination of income and growth.