The Dividend Aristocrats Have Been a Great Investment

The dividend aristocrats are an elite group. It’s not easy for a company to join the Dividend Aristocrats List, which is exactly why there are currently only 53 dividend stocks that qualify.

These S&P Dividend Aristocrats are large businesses across all the major industry groupings, but they have one thing in common, a large moat with a huge brand that has allowed them to continue profitable operations spanning decades.

Everyone should be familiar with most of the companies on this list, such as 3M, McDonald’s and Johnson & Johnson. But there are also some less familiar names that make the list as well, including Aflac and Genuine Parts.

S&P Dividend Aristocrats are coveted by investors because of their strong business models and consistently increasing dividend payments. Smart Dividend Stocks has examined every dividend aristocrat currently on the list and compared them across standard metrics such as P/E and EV/EBITDA.

Average yield for the Dividend Aristocrats is ‘just’ 2.5%, which seems low given the minimum 20 years that the company has raised its dividend. The reason for a somewhat low yield is that companies have raised dividends along with earnings, and the value of the company increased in step. While a basket of dividend aristocrat stocks may not bring you the highest yield, it does bring high quality businesses that tend to be safe investments.

As we would expect with a highly coveted group of strong companies, the valuations are not cheap, but you get what you pay for. The average P/E for the group is 19.6x and the average EV/EBITDA for the S&P Dividend Aristocrats is 13.1x. While the average is high, there are still some bargains within the group. Most of these stocks will continue to raise their dividends in the coming years, but some are at risk, they have low Dividend Safety Scores, and are likely to cut their dividends.