What Are The Dividend Achievers, Contenders, Aristocrats, Champions, and Kings?

Up to date on January seventeenth, 2024

This can be a visitor contribution by Kanwal Sarai from Merely Investing, up to date by Bob Ciura

Buyers can comply with a number of completely different methods for shares. Some traders comply with momentum methods, buying and selling shares with excessive worth beneficial properties. Different traders comply with a excessive progress technique specializing in tech shares, like Apple (AAPL) and Amazon (AMZN).

One more sort of investor seeks revenue by shopping for and holding high-yield shares, like utilities and actual property funding trusts (REITs).

A fourth strategy is dividend progress investing, specializing in shares that pay a rising dividend yearly. This technique is more and more widespread, and the kind of shares are categorized into the Dividend Achievers, Contenders, Aristocrats, Champions, and Kings.

The Dividend Aristocrats are a bunch of 68 shares within the S&P 500 Index, which have elevated their dividends for 25+ consecutive years.

You may obtain an Excel spreadsheet of all 68 Dividend Aristocrats (with metrics that matter corresponding to dividend yields and price-to-earnings ratios) by clicking the hyperlink under:

This text will focus on dividend progress investing, and several other of the varied lists of dividend progress shares.

What’s Dividend Development Investing?

Dividend progress investing is an strategy to purchasing and holding the inventory of firms rising their dividend yearly.

Dividend progress traders need to spend money on undervalued shares paying a dividend as an alternative of overvalued shares that don’t. As well as, these traders rationalize that dividends require actual money to pay shareholders and thus are an indicator of the businesses’ precise earnings and well being.

Moreover, an organization demonstrating the flexibility to lift the dividend yearly over time in all probability has enterprise mannequin. However, an organization chopping or suspending its dividend is clearly struggling.

Dividend progress shares are sorted into teams known as the Dividend Achievers, Contenders, Aristocrats, Champions, and Kings, however what precisely are they?

What are the Dividend Achievers, Contenders, Aristocrats, Champions, and Kings?

Dividend Achievers are firms which have raised their dividends for ten years in a row or extra. Apart from the 10-year dividend progress streak, firms should be listed on the New York Inventory Alternate (NYSE) or Nasdaq and have a three-month common each day buying and selling quantity of $1 million.

At the moment, there are about 400 Dividend Achievers. Many firms are from the Shopper, Industrials, Financials, and Utilities sectors. As well as, the group contains firms like Microsoft (MSFT), Walmart (WMT), J. M. Smucker (SJM), 3M Firm (MMM), and so forth.

The subsequent class is the Dividend Contenders. They’re shares elevating the dividend for between 10 and 24 years. The record is just like the Dividend Achievers record, however since it’s capped at 24 years, the overall variety of firms is smaller.

At the moment, there are round 340 Dividend Contenders. The sector with essentially the most important illustration is Monetary Providers, adopted by Industrials and Utilities. This group contains firms like AbbVie (ABBV), Dwelling Depot (HD), Huntington Ingalls Industries (HII), and plenty of native and regional banks.

The Dividend Aristocrats are firms which have raised their dividends for 25+ years and are part of the S&P 500 Index. As well as, they will need to have a minimal market capitalization of $3 billion and a $5+ million common each day buying and selling quantity for the three months earlier than the rebalancing date.

On the finish of 2023, 68 firms have been members of the Dividend Aristocrats. The quantity is comparatively small due to the stricter necessities. Sectors with essentially the most important illustration are Shopper Staples and Industrials.

Firms on this record are sometimes bigger, well-established firms which are market leaders. For instance, firms like Worldwide Enterprise Machines (IBM), Colgate-Palmolive (CL), Coca-Cola (KO), and Consolidated Edison (ED) are on the record.

The Dividend Champions are just like the Dividend Aristocrats. Nevertheless, the one requirement is rising the dividend for 25 or extra years. Consequently, the variety of firms on the record is bigger at ~150. As well as, the record contains firms which are part of the Dividend Aristocrats and ones with a market capitalization of lower than $3 billion and are usually not a member of the S&P 500 Index.

The 2 sectors with essentially the most illustration are Industrials and Monetary Providers.

Smaller firms on this record embody Andersons (ANDE), MGEE Power (MGEE), and Tootsie Roll Industries (TR).

The final class is the Dividend Kings. To achieve this standing, an organization should improve the dividend for 50+ consecutive years. There is no such thing as a different requirement; nonetheless, the duty isn’t a straightforward one.

At the moment, there are solely 50 firms on the record. Examples of firms on this record embody Federal Realty Belief (FRT), Emerson Electrical (EMR), Johnson & Johnson (JNJ), and Procter & Gamble (PG).

Dividend Aristocrat Spotlight: Realty Earnings (O)

Realty Earnings is a retail-focused REIT that owns greater than 6,500 properties. It owns retail properties that aren’t a part of a wider retail improvement (corresponding to a mall), however as an alternative are standalone properties.

Which means the properties are viable for a lot of completely different tenants, together with authorities providers, healthcare providers, and leisure.

Supply: Investor Presentation

The dividend progress streak stands at 26 years. The final 5 years have seen dividend progress at a fee of three% yearly, however the inventory yields 5.2%. The projected payout ratio for the 12 months is 76%, which must be thought-about protected for REIT.

Click on right here to obtain our most up-to-date Certain Evaluation report on Realty Earnings (O) (preview of web page 1 of three proven under):

Dividend King Spotlight: Johnson & Johnson (JNJ)

A favourite Dividend King of traders is Johnson & Johnson, the healthcare conglomerate. Johnson & Johnson is a diversified well being care firm and a pacesetter within the space of prescription drugs and medical gadgets.

Johnson & Johnson is a diversified well being care firm and a pacesetter within the space of prescription drugs (~49% of gross sales), medical gadgets (~34% of gross sales) and client merchandise (~17% of gross sales). The corporate has annual gross sales in extra of $93 billion.

Johnson & Johnson’s key aggressive benefit is the scale and scale of its enterprise. The corporate is a worldwide chief in a number of healthcare classes. Johnson & Johnson’s diversification permits it to proceed to develop even when one of many segments is underperforming.

The corporate has elevated its dividend for 60 consecutive years, making it a Dividend King. The inventory is owned by many well-known cash managers. For instance, J&J is a Kevin O’Leary dividend inventory.

Click on right here to obtain our most up-to-date Certain Evaluation report on JNJ (preview of web page 1 of three proven under):

Which shares ought to I spend money on?

On the finish of the day crucial query for traders is: Which shares ought to I spend money on? The straightforward reply is: Spend money on high quality dividend paying shares when they’re priced low (undervalued). The Merely Investing on-line course teaches you precisely determine when a inventory is a top quality inventory (and when it isn’t a top quality inventory), and when a inventory is undervalued (and overvalued).

A easy guidelines of 12 guidelines of investing lets you choose high quality shares when they’re undervalued, and simply filter by way of the record of dividend Achievers, Contenders, Aristocrats, Champions, and Kings.

Different Dividend Lists

The next lists comprise many extra high-quality dividend shares: