UPDATE: These dividend stocks beat the Dow and S&P 500 through thick and thin
By Philip van Doorn, MarketWatch
Considered conservative investments, so-called Dividend Aristocrats have outperformed the broader market for most periods
Before the painful fourth-quarter stock market decline, steady dividend payers probably weren't foremost in many investors' minds.
After all, the Federal Reserve was raising interest rates and the massive cut in federal corporate income taxes was setting up even better earnings and sales comparisons than usual. But the current lower valuations (and higher yields) for "Dividend Aristocrats," as well as their better short-term and long-term performance, might inspire you to take a second look.
We'll list the highest yielding Dividend Aristocrats, as well as those most favored by analysts, after defining the groups and showing their performance against broad indexes for various periods.
S&P Dow Jones Indices maintains the S&P 500 Dividend Aristocrats Index , which is made up of the 53 companies in the S&P 500 Index that have raised their regular dividends on common shares for at least 25 consecutive years. It makes do difference how high a Dividend Aristocrat's current dividend yield is. The idea is that a commitment among corporate management teams to increasing their payout to investors each year can lead to better performance over the long haul.
One easy way to invest in the Dividend Aristocrats as a group is the ProShares S&P 500 Dividend Aristocrats ETF (NOBL). The ETF holds all 53 Dividend Aristocrats and has an annual expense ratio of 0.35%, with a five-star rating (the highest) from Morningstar.
The S&P High-Yield Dividend Aristocrats Index includes the 111 companies in the S&P 1500 Composite Index that have increased their regular dividend payouts for at least 20 straight years. (The S&P 1500 Composite Index is made up of the S&P 500, the S&P 400 Mid-Cap Index and the S&P 600 Small-Cap Index . Therefore, all S&P 500 Dividend Aristocrats are also high-yield Dividend Aristocrats.)
The SPDR S&P Dividend ETF (SDY) holds all of the high-yield Dividend Aristocrats. It also has annual expenses of 0.35% and a five-star rating from Morningstar.
Here's how the S&P 500 Dividend Aristocrats Index and the S&P High-Yield Dividend Aristocrats Index performed during the fourth quarter against the Dow Jones Industrial Average , the full S&P 500 and the S&P Composite 1500 Index, with dividends reinvested:
The Dividend Aristocrats held up best during the broad decline. But they brought up the rear during the first three quarters of 2018:
For the full year, the Aristocrats were the best performers:
It may surprise you that the Aristocrats also beat the broad indexes for five years, through the end of 2018:
For 10 years, through 2018, results were mixed, with the S&P 500 Dividend Aristocrats Index in the lead, while the S&P High-Yield Dividends Aristocrats Index was in fourth place:
But this is a time to take 10-year returns with a grain of salt (). We're approaching the March 2009 post-crisis low for the market, so 10-year returns can be deceptive. Here's how the indexes performed during 2008:
The first chart (for the fourth quarter of 2018) and the 2008 chart show that you might sleep a little easier with the Aristocrats during broad declines.
Finally, here's a 15-year chart:
The S&P 500 Dividend Aristocrats ran away with the best 15-year performance, but the High-Yield Dividend Aristocrats had a respectable second-place performance through 2018.
Highest-yielding Dividend Aristocrats
Getting back to the Aristocrat groups, we'll look at the high-yield Aristocrats, because the larger group includes all the S&P 500 Dividend Aristocrats, and because a 20-year record of annual dividend increases is rather impressive.
Here are the 25 highest-yielding stocks among the S&P High-Yield Dividend Aristocrats:
Company Ticker Dividend yield Total return - 2019 through Jan. 7 Total return - 2018 Total return - 5 years through Jan. 7 Also an S&P 500 Dividend Aristocrat?
AT&T Inc. US:T 6.60% 8% -22% 15% Yes
Tanger Factory Outlet Centers Inc. US:SKT 6.60% 5% -19% -20%
International Business Machines Corp. US:IBM 5.32% 4% -23% -26% Yes
Mercury General Corp. US:MCY 4.97% -2% 2% 31%
AbbVie Inc. US:ABBV 4.74% -2% -1% 114% Yes
People's United Financial Inc. US:PBCT 4.64% 5% -20% 23%
Exxon Mobil Corp. US:XOM 4.59% 5% -15% -16% Yes
Realty Income Corp. US:O 4.26% -1% 16% 105%
National Retail Properties Inc. US:NNN 4.20% -2% 18% 90%
United Bankshares Inc. US:UBSI 4.17% 5% -7% 27%
Cardinal Health Inc. US:CAH 4.16% 3% -25% -24% Yes
Leggett & Platt Inc. US:LEG 4.09% 4% -22% 42% Yes
Meredith Corp. US:MDP 4.04% 4% -18% 26%
Chevron Corp. US:CVX 3.99% 3% -10% 10% Yes
Eaton Vance Corp. US:EV 3.88% 3% -36% -2%
Old Republic International Corp. US:ORI 3.80% 0% 5% 55%
Consolidated Edison Inc. US:ED 3.79% -1% -7% 69% Yes
Target Corp. US:TGT 3.67% 5% 5% 31% Yes
Kimberly-Clark Corp. US:KMB 3.53% 0% -2% 33% Yes
Bank OZK US:OZK 3.52% 9% -52% -5%
J.M. Smucker Co. US:SJM 3.50% 4% -23% 8%
Franklin Resources Inc. US:BEN 3.42% 3% -23% -36% Yes
Federal Realty Investment Trust US:FRT 3.42% 1% -8% 32% Yes
PepsiCo Inc. US:PEP 3.39% -1% -5% 52% Yes
MDU Resources Group Inc. US:MDU 3.38% 1% -9% -7%
You can click on the tickers for more about each company, including news, profiles, price ratios, financials and analysts' ratings, estimates and price targets.
This first list is of obvious interest to income-seeking investors -- after all, 10-year U.S. Treasury notes yield about 2.70% and the iShares Core U.S. Aggregate Bond Index, which is designed to track the performance of the Bloomberg Barclays U.S. Aggregate Bond index, has an average yield to maturity of 3.27%, according to FactSet.
Having a relatively high yield can indicate that some (or many) investors are no longer confident the company can continue to increase its dividend. Shares of AT&T (T) were down 22% during 2018 (including reinvested dividends), while Tanger Factor Outlets Centers (SKT) -- which, like AT&T, yields 6.60% -- was down 19%. Both stocks have recovered a bit so far this month.
Best performers among the Dividend Aristocrats
(MORE TO FOLLOW) Dow Jones Newswires
January 11, 2019 16:50 ET (21:50 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
MW UPDATE: These dividend stocks beat the Dow and -2-
Here's a list of the 25 high-yield Dividend Aristocrats with the highest five-year total returns:
Company Ticker Total return - 5 years through Jan. 7 Total return - 2019 through Jan. 7 Total return - 2018 Dividend yield Also an S&P 500 Dividend Aristocrat?
Cintas Corp. US:CTAS 213% 3% 9% 1.19% Yes
Ross Stores Inc. US:ROST 153% 7% 5% 1.01%
American States Water Co. US:AWR 151% -6% 18% 1.74%
Vectren Corp. US:VVC 139% 0% 14% 2.67%
S&P Global Inc. US:SPGI 137% 2% 1% 1.15% Yes
NextEra Energy Inc. US:NEE 134% -1% 14% 2.58%
Atmos Energy Corp. US:ATO 129% -2% 10% 2.31%
Lancaster Colony Corp. US:LANC 128% -3% 39% 1.51%
California Water Service Group US:CWT 125% -6% 7% 1.67%
New Jersey Resources Corp. US:NJR 124% -3% 17% 2.65%
Sherwin-Williams Co. US:SHW 122% 1% -3% 0.87% Yes
UGI Corp. US:UGI 121% 2% 16% 1.92%
McCormick & Co. US:MKC 120% -1% 39% 1.65% Yes
McDonald's Corp. US:MCD 117% 1% 6% 2.57% Yes
Church & Dwight Co. US:CHD 117% 0% 33% 1.32%
Lowe's Cos. US:LOW 115% 4% 1% 2.01% Yes
AbbVie Inc. US:ABBV 114% -2% -1% 4.74% Yes
Becton, Dickinson and Co. US:BDX 113% -3% 7% 1.41% Yes
MSA Safety Inc. US:MSA 109% 1% 24% 1.60%
West Pharmaceutical Services Inc. US:WST 108% 1% 0% 0.61%
Automatic Data Processing Inc. US:ADP 107% 0% 14% 2.42% Yes
Realty Income Corp. US:O 105% -1% 16% 4.26%
Hormel Foods Corp. US:HRL 104% -1% 20% 1.99% Yes
Roper Technologies Inc. US:ROP 101% 1% 4% 0.69% Yes
Abbott Laboratories US:ABT 98% -4% 29% 1.85% Yes
Those are excellent five-year returns, when compared to a 54% total return for the S&P 500 and a 52% increase for the S&P Composite 1500, through Jan. 7.
Don't miss:These are the top stock picks for 2019 among Wall Street analysts ()
Create an email alert for Philip van Doorn's Deep Dive columns here ().
-Philip van Doorn; 415-439-6400; AskNewswires@dowjones.com
(END) Dow Jones Newswires
January 11, 2019 16:50 ET (21:50 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.