Dividend-paying stocks are a popular addition to any investment portfolio. Investors love them because they generate passive income. When you receive dividends, you’re getting a portion of profits from the companies you’re investing in.
Among dividend-paying stocks, Dividend Aristocrats are among the best. A Dividend Aristocrat is a company that has paid out dividends to investors in each of the last 25 years.
“We call it the hot sauce on the portfolio — to spice it up a little bit,” said Jordan Benold, a certified financial planner at Benold Financial Planning.
Here’s a breakdown of what the current Dividend Aristocrats are, and why you might consider adding them to your investment portfolio.
What Are Dividend Aristocrats?
A Dividend Aristocrat is a publicly traded company that has consistently paid dividends every year to its investors for the last 25 years. There are currently 65 companies on the Dividend Aristocrat list. Every year, new companies are added when they hit that 25-year threshold. If a company fails a dividend increase, it must wait another 25 years before it can be put back on the list. In order to be a Dividend Aristocrat, a company must be part of the S&P 500, which is an index that tracks the 500 largest companies listed on the stock exchange.
Dividend Aristocrats are able to be invested in traditional and online brokerage accounts. You can also invest in Dividend Aristocrats through exchange-traded funds (ETFs). This ETF contains all aristocrats rather than individual ones.
The current Dividend Aristocrats list for 2021 is below.
List of Dividend Aristocrats for 2021
The current list of Dividend Aristocrats includes 65 companies:
| Company | Sector | Years of dividend growth |
|---|---|---|
| 3M (MMM) | Industrials | 63 |
| A.O. Smith (AOS) | Industrials | 28 |
| Abbott Laboratories (ABT) | Health care | 49 |
| AbbVie (ABBV) | Health care | 49 |
| Aflac (AFL) | Financials | 38 |
| Air Products and Chemicals (APD) | Materials | 39 |
| Albemarle Corp. (ALB) | Materials | 27 |
| Amcor PLC (AMCR) | Materials | 38 |
| Archer-Daniels-Midland Co. (ADM) | Consumer staples | 47 |
| AT&T (T) | Communications services | 36 |
| Atmos Energy Corp. (ATO) | Utilities | 34 |
| Automatic Data Processing (ADP) | Information technology | 46 |
| Becton, Dickinson & Co. (BDX) | Health care | 49 |
| Brown-Forman Corp. (BF-B) | Consumer staples | 37 |
| Cardinal Health (CAH) | Health care | 34 |
| Caterpillar (CAT) | Industrials | 27 |
| Chevron (CVX) | Energy | 34 |
| Chubb (CB) | Financials | 28 |
| Cincinnati Financial (CINF) | Financials | 61 |
| Cintas Corp. (CTAS) | Industrials | 37 |
| The Clorox Co. (CLX) | Consumer staples | 45 |
| The Coca-Cola Co. (KO) | Consumer staples | 59 |
| Colgate-Palmolive (CL) | Consumer staples | 59 |
| Consolidated Edison (ED) | Utilities | 47 |
| Dover (DOV) | Industrials | 65 |
| Ecolab (ECL) | Materials | 29 |
| Emerson Electric (EMR) | Industrials | 59 |
| Essex Property Trust Inc. (ESS) | Real estate | 27 |
| Expeditors International of Washington Inc. (EXPD) | Industrials | 27 |
| ExxonMobil (XOM) | Energy | 37 |
| Federal Realty Investment Trust (FRT) | Real estate | 49 |
| Franklin Resources (BEN) | Financials | 40 |
| General Dynamics (GD) | Industrials | 30 |
| Genuine Parts (GPC) | Consumer discretionary | 65 |
| Hormel Foods (HRL) | Consumer staples | 55 |
| Illinois Tool Works (ITW) | Industrials | 50 |
| International Business Machines (IBM) | Information technology | 25 |
| Johnson & Johnson (JNJ) | Health care | 59 |
| Kimberly Clark (KMB) | Consumer staples | 48 |
| Leggett & Platt (LEG) | Consumer discretionary | 50 |
| Linde (LIN) | Materials | 28 |
| Lowe’s (LOW) | Consumer discretionary | 47 |
| McCormick & Co. (MKC) | Consumer staples | 35 |
| McDonald’s (MCD) | Consumer discretionary | 44 |
| Medtronic (MDT) | Health care | 43 |
| NextEra Energy Inc. (NEE) | Utilities | 25 |
| Nucor (NUE) | Materials | 48 |
| Pentair (PNR) | Industrials | 44 |
| People’s United Financial (PBCT) | Financials | 28 |
| PepsiCo (PEP) | Consumer staples | 48 |
| PPG Industries (PPG) | Materials | 49 |
| Procter & Gamble (PG) | Consumer staples | 65 |
| Realty Income Corp. (O) | Real estate | 26 |
| Roper Technologies (ROP) | Industrials | 28 |
| S&P Global (SPGI) | Financials | 48 |
| Sherwin-Williams (SHW) | Materials | 42 |
| Stanley Black & Decker (SWK) | Industrials | 53 |
| Sysco (SYY) | Consumer staples | 41 |
| T. Rowe Price Group (TROW) | Financials | 35 |
| Target (TGT) | Consumer discretionary | 49 |
| VF Corp. (VFC) | Consumer discretionary | 49 |
| W.W. Grainger (GWW) | Industrials | 50 |
| Walgreens Boots Alliance (WBA) | Consumer staples | 45 |
| Walmart (WMT) | Consumer staples | 48 |
| West Pharmaceutical Services Inc. (WST) | Health care | 28 |
Should You Invest in Dividend Aristocrat Stocks?
Like any investment, Dividend Aristocrat stocks play a specific role. Their main purpose in a portfolio is to generate consistent dividend income over the long term.
“They’re not always the highest dividend yields,” said Brett Maikowski, an investment adviser at THM Wealth Management. “But they’ve been sustainable, and they’ve been consistent, and they’ve grown.”
That might make sense for you if you need that consistent income to maintain your spending and lifestyle. Traditionally, Dividend Aristocrats have appealed to retirees, who prioritize income over capital growth. But young investors should consider adding Dividend Aristocrats to their investment portfolios. Dividend Aristocrats are long term investments. With the power of time and compound interest, you can reinvest any dividends you receive and watch the value of your portfolio grow.
Keep in mind, before you buy up a bunch of Dividend Aristocrats, ask yourself a few questions: What is your investment goal? Is your portfolio diversified? What role would the Dividend Aristocrats play? Make sure your portfolio matches with your long-term goals.
“It’s really important to know what your criteria is, and then make sure your investments mirror that,” Maikowski said.
Pro Tip
You can invest in Dividend Aristocrats using a tax-advantaged investment account like a traditional or Roth IRA.
Dividend Aristocrats ETF
If you’ve decided dividend investing makes sense for you, an easy way to get started is with a Dividend Aristocrat ETF.
Here’s how it works: An ETF, or exchange-traded fund, is basically an investment that tracks a specific group of stocks. In this case, that’s Dividend Aristocrats.
“Whether it’s an ETF or a fund, you’re buying a basket of stocks,” Maikowski said.
Every ETF is different, but a Dividend Aristocrat ETF might simply invest in all 65 companies weighted equally, giving you exposure to the whole group without requiring you to invest in each company individually.
“ETFs are great because you get diversification and you own all of them,” Benold said.
Make sure you look under the hood of any ETF before you buy. Yield isn’t the only data point that’s important, Maikowski said. Pay attention to how the companies are weighted within, and look at those companies’ earnings and revenue growth. The more information you can gather before investing, the better.
Dividend Aristocrat Companies With the Highest Dividends
Dividend Aristocrats are known for the consistency of their dividends, not necessarily the high yield. A dividend yield is a ratio that tells the investor what percentage of a company’s share price is paid out each year.
Here are the 15 Dividend Aristocrats that currently have the highest dividends:
| Company | Dividend yield |
|---|---|
| AT&T (T) | 6.93% |
| T Rowe Price (TROW) | 6.15% |
| ExxonMobil (XOM) | 5.80% |
| Chevron (CVX) | 5.05% |
| AbbVie (ABBV) | 4.91% |
| Illinois Tool Works (ITW) | 4.51% |
| Peoples United Financial (PBCT) | 4.03% |
| Amcor (AMCR) | 4.01% |
| Consolidated Edison (ED) | 3.99% |
| Federal Realty Investment Trust (FRT) | 3.54% |
| Kimberly-Clark (KMB) | 3.54% |
| Franklin Resources (BEN) | 3.51% |
| Cardinal Health (CAH) | 3.44% |
| Walgreens Boots Alliance (WBA) | 3.42% |
| Leggett & Platt (LEG) | 3.22% |
