UPDATE: These 'Dividend Aristocrat' stocks have been raising their dividends for decades, and there have been no dividend cuts during the pandemic

10:27 am ET August 29, 2020 (MarketWatch) Print

By Philip van Doorn, MarketWatch

Dozens of other S&P 500 companies, in contrast, have reduced their payouts

In a year of so much uncertainty, having a bit of surety about your investments is a luxury.

The S&P 500 Dividend Aristocrats -- stocks of 65 companies that have increased their dividends for at least 25 years -- have been solid, in that none of them have cut their payouts.

You might be thinking: Isn't that what they are supposed to do? Yes. But if you look at the components of the benchmark S&P 500 Index , 63 companies have cut or suspended their dividends this year. That's 14% of the non-Aristocrats. They are listed below, and the year-to-date returns are ugly. Of 63 dividend cutters, 56 have suffered double-digit declines (with dividends reinvested), and 49 are down at least 20%.

Among the 65 components of the S&P 500 Dividend Aristocrats Index , gainers and decliners are pretty much evenly split for 2020, with 33 showing positive returns through Aug. 21.

The entire S&P 500 Dividend Aristocrats Index is down 2.4% this year, which may seem a poor showing against the 6.5% return for the broader S&P 500 Index. However, large technology companies that dominate the benchmark index have had an outsized effect on its market-capitalization-weighted performance.

In the U.S. financial media, "big tech" pretty much means the FAANG stocks and Microsoft Corp. (MSFT). This group is on fire this year and carries a tremendous weighting in the S&P 500, but only two of them are in the information technology sector, as defined by S&P Dow Jones Indices:

Company Ticker Total return - 2020 Market capitalization ($ billion)

Facebook Inc. Class A US:FB 30% $642

Apple Inc. US:AAPL 71% $2,127

Amazon.com Inc. US:AMZN 78% $1,645

Netflix Inc. US:NFLX 52% $217

Alphabet Inc. Class C US:GOOG 18% $527

Alphabet Inc. Class A US:GOOGL 18% $473

Microsoft Corp. US:MSFT 36% $1,612

Source: FactSet

Together, the FAANG + Microsoft group's combined $7.24 trillion in market capitalization makes up 25.8% of the cap-weighted S&P 500. So, no, your index fund is not as diversified as you may think.

So it's no surprise that the tech-heavy S&P 500 has been outperforming the S&P 500 Dividend Aristocrats for many years. But if you look back 15 years, the story changes:

One way to invest in the entire Aristocrats group is the ProShares S&P 500 Dividend Aristocrats (NOBL).

The Dividend Aristocrats list

An S&P 500 stock is considered a Dividend Aristocrat if it has raised its dividend payout on common shares for at least 25 consecutive years. It makes no difference how high a stock's current dividend yield might be. S&P Dow Jones Indices will include a newly formed company as a Dividend Aristocrat if it was formed through a merger that included a company that was already an Aristocrat and it continues raising its dividend.

Here are all 65 S&P 500 Dividend Aristocrats, sorted by current yield, with total returns for 2020 through Aug. 21 (scroll the table to the right to see the yields and returns):

Company Ticker Industry Dividend yield Total return - 2020

Exxon Mobil Corp. US:XOM Integrated Oil 8.49% -38%

AT&T Inc. US:T Telecommunications 7.01% -20%

People's United Financial Inc. US:PBCT Banks 6.89% -36%

Chevron Corp. US:CVX Integrated Oil 6.06% -27%

Federal Realty Investment Trust US:FRT Real Estate Investment Trusts 5.28% -36%

Franklin Resources Inc. US:BEN Investment Managers 5.15% -17%

AbbVie Inc. US:ABBV Pharmaceuticals: Major 4.98% 11%

Walgreens Boots Alliance Inc. US:WBA Drugstore Chains 4.74% -31%

Realty Income Corp. US:O Real Estate Investment Trusts 4.58% -15%

Consolidated Edison Inc. US:ED Electric Utilities 4.24% -18%

Amcor PLC US:AMCR Containers/Packaging 4.14% 5%

Leggett & Platt Inc. US:LEG Home Furnishings 4.02% -20%

Essex Property Trust Inc. US:ESS Real Estate Investment Trusts 3.90% -28%

Cardinal Health Inc. US:CAH Medical Distributors 3.90% 0%

3M Co. US:MMM Industrial Conglomerates 3.64% -6%

Nucor Corp. US:NUE Steel 3.60% -19%

Coca-Cola Co. US:KO Beverages: Non-Alcoholic 3.47% -13%

Genuine Parts Co. US:GPC Wholesale Distributors 3.39% -11%

Archer-Daniels-Midland Co. US:ADM Agricultural Commodities/Milling 3.30% -3%

Raytheon Technologies Corp. US:RTX Aerospace & Defense 3.15% -30%

Sysco Corp. US:SYY Food Distributors 3.13% -31%

V.F. Corp. US:VFC Apparel/Footwear 3.11% -37%

Cincinnati Financial Corp. US:CINF Property/Casualty Insurance 3.10% -25%

Aflac Inc. US:AFL Life/Health Insurance 3.08% -30%

PepsiCo Inc. US:PEP Beverages: Non-Alcoholic 3.00% 1%

Caterpillar Inc. US:CAT Trucks/Construction/Farm Machinery 2.98% -4%

Emerson Electric Co. US:EMR Electrical Products 2.95% -9%

General Dynamics Corp. US:GD Aerospace & Defense 2.94% -13%

Kimberly-Clark Corp. US:KMB Household/Personal Care 2.72% 16%

T. Rowe Price Group US:TROW Investment Managers 2.67% 12%

Johnson & Johnson US:JNJ Pharmaceuticals: Major 2.64% 6%

Automatic Data Processing Inc. US:ADP Data Processing Services 2.64% -18%

Chubb Limited US:CB Property/Casualty Insurance 2.56% -21%

McDonald's Corp. US:MCD Restaurants 2.36% 8%

Medtronic PLC US:MDT Medical Specialties 2.35% -12%

Illinois Tool Works Inc. US:ITW Industrial Machinery 2.34% 10%

Procter & Gamble Co. US:PG Household/Personal Care 2.30% 12%

Atmos Energy Corp. US:ATO Gas Distributors 2.28% -8%

Colgate-Palmolive Co. US:CL Household/Personal Care 2.24% 16%

Clorox Co. US:CLX Household/Personal Care 1.96% 50%

A. O. Smith Corp. US:AOS Building Products 1.96% 4%

Air Products and Chemicals Inc. US:APD Chemicals: Specialty 1.87% 23%

PPG Industries Inc. US:PPG Industrial Specialties 1.83% -10%

Dover Corp. US:DOV Oilfield Services/Equipment 1.80% -4%

Target Corp. US:TGT Specialty Stores 1.77% 22%

Hormel Foods Corp. US:HRL Food: Meat/Fish/Dairy 1.77% 19%

Stanley Black & Decker Inc. US:SWK Tools & Hardware 1.76% -3%

W.W. Grainger Inc. US:GWW Wholesale Distributors 1.74% 6%

Albemarle Corp. US:ALB Chemicals: Specialty 1.72% 24%

Pentair PLC US:PNR Miscellaneous Manufacturing 1.65% 2%

Walmart Inc. US:WMT Food Retail 1.64% 12%

(MORE TO FOLLOW) Dow Jones Newswires

August 29, 2020 10:27 ET (14:27 GMT)