Dividend aristocrats are defined as companies within the S&P 500 index, that have paid consistent dividends for 25 years & increased their payout.
In other words, the organizations are reliable & frequent in their dividend payouts throughout decades.
Why go for dividend aristocrats?
If you are considering medium to long term dividend investing, choosing dividend aristocrats is a relatively safe choice. You see, these companies are giants that have been around for generations & for the most part, prove consistent revenue (growth).
What companies fall under dividend aristocrats?
Examples include the below 6 companies, but extend much further:
- The Walt Disney Company
- The Coca-Cola Company
- Johnson & Johnson
- Procter & Gamble
Aristocrats & investment strategy
Before you decide on this type of investing, consider your short & long-term goals. If you desire to be wealthy quickly & have a high-risk tolerance then dividends might not be for you to begin with.
If you have a medium risk tolerance, there are many companies on the exchange offering dividends, that are not as large as these aristocrats. The difference is usually a higher dividend yield, with the associated risk the company can't, or won't, pay.
Comparing S&P 500 return vs all aristocrats
The below image exemplifies the difference between the S&P500 index value over time, and the same value plotted for dividend aristocrats. As these companies tend the be much larger & established, a drop in the market does not impact them as much. On the other hand, an increase does get amplified.
|Broker name||Type||Review||Rating||Broker site|
|CMC markets*||Mostly Trader||Link||4.5||Visit broker|
|Trading212||Investor & Trader||Link||4.1||Visit broker|
|Bux Zero||Investor & Trader||Link||4.0||Visit broker|
|Admiral Markets||Investor & Trader||Link||4.0||Visit broker|
|Fusion Markets*||Trader||Link||3.5||Visit broker|
*If you choose a trading broker, please remember: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.