By Philip van Doorn, MarketWatch
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 /zigman2/quotes/210598428/delayed XX:SP50DIV -0.08% , which is made up of the 53 companies in the S&P 500 Index /zigman2/quotes/210599714/realtime SPX -1.89% 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 /zigman2/quotes/208747379/composite NOBL -0.93% . 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 /zigman2/quotes/210599901/delayed XX:SPHYDA -0.81% 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 /zigman2/quotes/219506813/composite MID -2.43% and the S&P 600 Small-Cap Index /zigman2/quotes/210599868/delayed SML -1.37% . Therefore, all S&P 500 Dividend Aristocrats are also high-yield Dividend Aristocrats.)
The SPDR S&P Dividend ETF /zigman2/quotes/206871683/composite SDY -0.82% 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 /zigman2/quotes/210598065/realtime DJIA -1.30% , 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: