S&P 500 Dividend Aristocrats Index

What Is the S&P 500 Dividend Aristocrats Index?

The S&P 500 Dividend Aristocrats Index is a rundown of companies from the Standard and Poor's 500 Index (the S&P 500) that have a history of raising their dividends for something like 25 consecutive years. Each company is similarly weighted inside the index.

Understanding S&P 500 Dividend Aristocrats Index

The S&P 500 Dividend Aristocrats Index tracks the performance of notable, chiefly large-cap, blue-chip companies. Standard and Poor's will eliminate companies from the index when they fail to increase dividend payments from the previous year. The index is rebalanced quarterly in January, April, July, and October.

The S&P 500 Dividend Aristocrats incorporates stocks with a float-adjusted market capitalization of no less than $3 billion and an average daily trading volume of no less than $5 million, as well as consistently expanding dividend payments. The index requires at least 40 companies and presently has 65 constituents as of December 2021.

The strength of the dividend aristocrats lies not just in that frame of mind to continually increase dividend payments to shareholders, yet additionally in their performance. These companies have generally out-appreciated the S&P 500; dividend aristocrats yielded an average of 2.5% compared to roughly 1.8% each year. They additionally show somewhat less volatility than the S&P index itself.

One analysis of companies on the dividend aristocrats list is they in some cases use share buybacks to work with dividend increases. The problem is a true dividend aristocrat ought to increase payouts to shareholders from one year to another, and on the off chance that the company is overpaying for its shares, it may not be acting to shareholders' greatest advantage, even assuming dividends are expanding.

S&P 500 Dividend Aristocrats Examples

Dividend aristocrats come from different industries and sectors, and are of changing ages — however of course, they must have been in business for 25 years, at any rate. A few companies have booked dividend growth for quite a long time, like Emerson Electric Co. (EMR), which offers electronic products and engineering services to industrial clients. Different companies, as Praxair (PX), which makes industrial gases, Roper Technologies (ROP), a planner of software and different products, and A.O. Smith (AOS), which makes water heating and cleaning equipment, just became eligible in the late 2010s.

Three companies added to the S&P 500 Dividend Aristocrats Index in 2021:

• IBM
• NextEra Energy
• West Pharmaceutical Services

While the Dividend Aristocrats index will in general feature notable firms, being a blue-chip stock doesn't guarantee inclusion. A company can be dropped from the index on the off chance that it doesn't increase its dividend one year or on the other hand in the event that it is eliminated from the more extensive S&P 500 Index. The 2008 recession, specifically, caused the removal of some large name companies from the rundown like Bank of America (BAC), General Electric (GE), and Pfizer (PFE).

Top S&P 500 Dividend Aristocrats

As of Nov. 30, 2021, almost half of the S&P 500 Dividend Aristocrat companies fall into one of two sectors: industrials (20%) or consumer staples (19.9%). Materials (12.7%), medical services (10.6%), and financials (10.6%) are other huge sectors. Here are the leading individual companies.

Exchange-traded funds (ETF) are a well known approach to acquiring exposure to the rundown of dividend aristocrats. A few well known assets that straightforwardly follow the index incorporate the ProShares S&P 500 Dividend Aristocrats ETF (NOBL) and the SPDR S&P Global Dividend ETF (WDIV).

Different funds that track dividend stocks yet don't straightforwardly follow the index incorporate the iShares Select Dividend ETF (DVY) and the iShares Core High Dividend ETF (HDV). Even however they're making an effort not to follow the index, each fund will in general incorporate a portion of the 65 "aristocrats," since the universe of consistently rising dividend-guarantors isn't too different.

Highlights

• A company can be dropped from the S&P 500 Dividend Aristocrats Index in the event that it doesn't increase its dividend or on the other hand on the off chance that it is taken out from the more extensive S&P 500 Index.
• The S&P 500 Dividend Aristocrats Index incorporates stocks with a float-adjusted market capitalization of no less than $3 billion and an average daily trading volume of something like $5 million.
• The S&P 500 Dividend Aristocrats Index is a rundown of companies, fundamentally notable large-cap, blue-chip companies, in the S&P 500 with a history of expanding dividends for something like 25 consecutive years.