What Should You Know About S&P 500 Dividend Aristocrats?


Quick Answer

The S&P 500 Dividend Aristocrats is an index that mimics the strategy of dividend yielding investors, reports MarketWatch. As of January 2015, the index includes 53 stocks. Inclusion requires membership in the S&P 500 and a history of 25 years or more of increasing dividend payments.

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Full Answer

The Dividend Aristocrats' strategy is to buy large-cap stocks with increasing payouts to produce higher returns than a traditional market-cap-weighted S&P 500 Index fund, states MarketWatch. In 2014, the total return was 15.54 percent, whereas the return for the S&P 500 Index was 13.46 percent. Over the previous three years, the return was 20.36 percent, in comparison to 18.66 percent for the S&P 500.

The highest yielding dividends range from 3.01 percent to 5.36 percent as of October 2014, reports MarketWatch. However, the lowest yield in the Index was 0.56 percent. The top four dividend-yielding companies were AT&T, HCP, Consolidated Edison and McDonald's. For long-term investment targets, the Aristocrats with the fastest estimated earnings growth were Nucor, AbbVie, Automatic Data Processing and Sherwin Williams.

ProShares S&P 500 Dividend Aristocrats is the only ETF that tracks the index as of October 2014. The fund includes companies that focus on consumer staples and consumer discretionary, and holdings are equally weighted, states MarketWatch.

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