Dividend Aristocrats outperform S&P 500 by 8% annually over past 10 years

I recently read two articles about how the Dividend Aristocrats have outperformed the market. You may have heard of Dividend Champions which is a compilation that most dividend growth investor use, but not Divided Aristocrats. Both Dividend Champions and Dividend Aristocrats cover stocks with 25 or more consecutive years of dividend increases.

So what’s the difference? Basically that Aristocrats are members of the S&P 500 index.

The Aristocrats are compiled by the S&P, and In 2005 they formalized it by creating an index with that name. Here is their current description of the stocks in that index: “S&P 500® Dividend Aristocrats® measure the performance S&P 500 companies that have increased dividends every year for the last 25 consecutive years.” There are currently 50 companies in the Dividend Aristocrat index.

Here is how David Fish of The DRiP Investing Resource Center describes the Dividend Champions: “U.S. Companies with 25+ Straight Years Higher Dividends.” There are currently 108 companies that made last months Dividend Champion list.

Most dividend growth investors (myself included) use the broader more inclusive champions list to perform their research. However, in the case of these articles the Aristocrats are a better comparison to gauge performance against, since they are all included in the broader S&P 500 list. The S&P 500 index is what Wall Street uses to track the overall U.S. stock market or “the market.”

That said, out of the largest 500 U.S. companies 50 of them (10%) have been able to raise their dividends for the past 25 consecutive years. There is a chart near the beginning of the Marketwatch article (link below) after I ran the numbers it shows how these 50 noble Aristocrats have overall outperformed the market by 8% a year for the past 10 years. Quite an accomplishment really. No one knows if that performance will be repeated in the next 10 years; but it is comforting to know that this group of strong dividend paying and more importantly dividend increasing companies have a strong long-term performance record.

Here are links to the two articles:

http://www.marketwatch.com/story/these-dividend-aristocrat-stocks-have-risen-up-to-24-a-year-for-a-decade-2016-03-01?siteid=bigcharts&dist=bigcharts

http://www.dividendgrowthinvestor.com/2016/04/dividend-aristocrats-for-dividend.html

Enjoy!

Filed in: Dividend Growth Investing • Stock Market