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deep-dive:-these-‘dividend-aristocrat’-stocks-have-been-raising-their-dividends-for-decades,-and-there-have-been-no-dividend-cuts-during-the-pandemic
deep-dive:-these-‘dividend-aristocrat’-stocks-have-been-raising-their-dividends-for-decades,-and-there-have-been-no-dividend-cuts-during-the-pandemic

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Deep Dive: These ‘Dividend Aristocrat’ stocks have been raising their dividends for decades, and there have been no dividend cuts during the pandemic

Deep Dive

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

Pictured is a Raytheon Patriot missile launcher. The company is part of the S&P 500 Dividend Aristocrats Index because it has increased its dividend payouts for at least 25 consecutive years.


Raytheon Technologies Corp.

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
US:SPX,
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
XX:SP50DIV,
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.
US: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:

Over 15 years, the S&P 500 Dividend Aristocrats Index has beaten the performance of the full S&P 500 Index.


FactSet

One way to invest in the entire Aristocrats group is the ProShares S&P 500 Dividend Aristocrats
US: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:

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%

Linde PLC

US:LIN Chemicals: Specialty

1.58%

16%

Abbott Laboratories

US:ABT Medical Specialties

1.41%

19%

Lowe’s Cos. Inc.

US:LOW Home Improvement Chains

1.36%

37%

Otis Worldwide Corp.

US:OTIS Building Products

1.26%

N/A

Becton, Dickinson and Co.

US:BDX Medical Specialties

1.23%

-5%

McCormick & Co. Inc.

US:MKC Food: Specialty/Candy

1.22%

21%

Expeditors International of Washington Inc.

US:EXPD Air Freight/Couriers

1.21%

11%

Carrier Global Corp.

US:CARR Industrial Machinery

1.08%

N/A

Brown-Forman Corp. Class B

US:BF Beverages: Alcoholic

0.97%

7%

Ecolab Inc.

US:ECL Chemicals: Specialty

0.96%

1%

Cintas Corp.

US:CTAS Other Consumer Services

0.80%

19%

Sherwin-Williams Co.

US:SHW Industrial Specialties

0.79%

17%

S&P Global Inc.

US:SPGI Financial Publishing/Services

0.74%

33%

Roper Technologies Inc.

US:ROP Electronic Equipment/Instruments

0.47%

22%

Source: FactSet

You can click on the tickers for more about each company.

Despite no dividend cuts among the group this year, they are a possibility. For example, Exxon Mobil Corp.
US:XOM
decided in April to leave its quarterly dividend (paid in May) unchanged, when it traditionally raises the dividend at that time each year. Unless the company makes a move later this year, it will not longer be an Aristocrat.

Dividend cuts for Exxon and Chevron Corp.
US:CVX
have traditionally seemed “virtually unthinkable,” as Raymond James analyst Pavel Molchanov said in March. Sure enough, Exxon has shown a real commitment to maintaining the current payout by taking drastic measures to preserve cash during the extended period of low fuel demand. These measures include a suspension of matching 401(k) contributions for its employees.

So you need to do your own research before considering a Dividend Aristocrat, or any other company, for investment.

Dividend cutters

Here are all 63 companies among the S&P 500 that have suspended or lowered their dividend payments this year. This list is sorted by ascending total returns. Current dividend yields are included:

Company

Ticker

Total return – 2020

Dividend yield

Carnival Corp.

US:CCL -71%

0.00%

Occidental Petroleum Corp.

US:OXY -66%

0.30%

Coty Inc. Class A

US:COTY -66%

0.00%

TechnipFMC PLC

US:FTI -64%

1.74%

Nordstrom Inc.

US:JWN -64%

0.00%

Kohl’s Corp.

US:KSS -61%

0.00%

Macy’s Inc.

US:M -61%

0.00%

Marathon Oil Corp.

US:MRO -61%

0.00%

Alliance Data Systems Corp.

US:ADS -61%

1.94%

Helmerich & Payne Inc.

US:HP -60%

5.92%

Noble Energy Inc.

US:NBL -59%

0.80%

American Airlines Group Inc.

US:AAL -57%

0.00%

Simon Property Group Inc.

US:SPG -55%

8.06%

Wells Fargo & Co.

US:WFC -55%

1.69%

Royal Caribbean Group

US:RCL -53%

0.00%

Delta Air Lines Inc.

US:DAL -53%

0.00%

Schlumberger NV

US:SLB -53%

2.69%

National Oilwell Varco Inc.

US:NOV -53%

0.00%

PVH Corp.

US:PVH -52%

0.00%

DXC Technology Co.

US:DXC -50%

0.00%

Boeing Co.

US:BA -48%

0.00%

Alaska Air Group Inc.

US:ALK -47%

0.00%

Western Digital Corp.

US:WDC -46%

0.00%

Tapestry Inc.

US:TPR -45%

0.00%

Vornado Realty Trust

US:VNO -44%

5.98%

Apache Corp.

US:APA -44%

0.70%

Kimco Realty Corp.

US:KIM -43%

0.00%

Ralph Lauren Corp. Class A

US:RL -42%

0.00%

Host Hotels & Resorts Inc.

US:HST -42%

0.00%

Invesco Ltd.

US:IVZ -41%

6.11%

Wynn Resorts Ltd.

US:WYNN -40%

0.00%

Capital One Financial Corp.

US:COF -37%

0.63%

Marriott International Inc. Class A

US:MAR -37%

0.00%

MGM Resorts International

US:MGM -36%

0.05%

Southwest Airlines Co.

US:LUV -35%

0.00%

Halliburton Co.

US:HAL -35%

1.14%

WestRock Co.

US:WRK -32%

2.81%

Molson Coors Beverage Co. Class B

US:TAP -31%

0.00%

Welltower Inc.

US:WELL -29%

4.35%

Las Vegas Sands Corp.

US:LVS -28%

0.00%

Ford Motor Co.

US:F -27%

0.00%

CenterPoint Energy Inc.

US:CNP -25%

3.03%

Ventas Inc.

US:VTR -25%

4.32%

Ross Stores Inc.

US:ROST -25%

0.00%

Harley-Davidson Inc.

US:HOG -25%

0.29%

Universal Health Services Inc. Class B

US:UHS -24%

0.00%

Darden Restaurants Inc.

US:DRI -24%

0.00%

Hilton Worldwide Holdings Inc.

US:HLT -21%

0.00%

General Motors Co.

US:GM -21%

0.00%

Gap Inc.

US:GPS -17%

0.00%

Expedia Group Inc.

US:EXPE -15%

0.00%

TJX Cos.

US:TJX -15%

0.00%

CME Group Inc. Class A

US:CME -13%

1.96%

Walt Disney Co.

US:DIS -12%

0.00%

Aptiv PLC

US:APTV -11%

0.00%

HCA Healthcare Inc.

US:HCA -10%

0.00%

Weyerhaeuser Co.

US:WY -3%

0.00%

Estee Lauder Cos. Inc. Class A

US:EL 0%

0.93%

Freeport-McMoRan Inc.

US:FCX 10%

0.00%

Maxim Integrated Products Inc.

US:MXIM 13%

0.00%

Progressive Corp.

US:PGR 31%

0.44%

Rollins Inc.

US:ROL 67%

0.58%

L Brands Inc.

US:LB 68%

0.00%

Source: FactSet

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