What Is the S&P 500 Dividend Aristocrats Index?
S&P 500 Dividend Aristocrats: A list of businesses from the Standard & Poor’s 500 Index (the S&P 500) that have increased their dividends for at least 25 years is called the S&P 500 Dividend Aristocrats Index. Every firm in the index has the same weight.
Understanding the S&P 500 Dividend Aristocrats Index
Tracking the performance of well-known, primarily large-cap, blue-chip corporations is the S&P 500 Dividend Aristocrats Index. If a company doesn’t raise its dividend payments from the prior year, Standard & Poor’s will remove it from the index. The index is rebalanced every quarter, in January, April, July, and October.
Dow Jones S&P Indices. “S&P 500 Dividend Aristocrats,” Print “S&P 500 Dividend Aristocrats Index (USD) Factsheet,” Page 1 of
In addition to continuously increasing dividend payments, the S&P 500 Dividend Aristocrats include equities with a float-adjusted market capitalization of at least $3 billion and an average daily trading volume of at least $5 million. The index presently has 66 components as of July 31, 2023, and needs a minimum of 40 firms.
The capacity of dividend aristocrats to consistently raise dividend payments to shareholders makes them strong. As of August 28, 2023, the Aristocrats index has not exceeded the S&P 500 in 1-year, 3-year, or 5-year annualized returns compared to the S&P 500.
Companies on the Dividend Aristocrats list have been criticized for sometimes using share buybacks to support dividend hikes. The issue is that, even when dividends are rising, a firm may not be operating in the best interests of its shareholders if it overpays for its shares. A natural dividend aristocrat should raise distributions to shareholders on an annual basis.
Members of the S&P 500 Dividend Aristocrats
Dividend aristocrats come in all shapes and sizes and from various backgrounds, albeit they must have been in the company for at least 25 years. Certain firms, like Emerson Electric Co. (EMR), which provides engineering services and electrical equipment to industrial customers, have recorded dividend increases for decades.
In 2018, other businesses were granted eligibility, including A.O. Smith (AOS), a water heating and purifying equipment manufacturer, and Roper Technologies (ROP), a software and product creator.
- M. Smucker Co., Nordson Corp., and CH Robinson Worldwide Inc. were added to the index in January 2023.
Even while the Dividend Aristocrats Index often includes well-known companies, membership is not guaranteed for blue-chip stocks. It may be removed if a firm does not raise its dividend for an entire year or is removed from the S&P 500 Index.
Several well-known corporations, including Bank of America (BAC), General Electric (GE), and Pfizer (PFE), were removed from the list, mainly as a result of the 2008 crisis.
Top Dividend Aristocrats in the S&P 500
Industrials (24.1%) and consumer staples (22.8%) comprise over half of the S&P 500 Dividend Aristocrat businesses as of July 31, 2023. Other notable industries include materials (12.5%), finance (11%), and healthcare (10.4%). As of July 31, 2023, the top ten individual firms are listed below.
Table of Contents: S&P 500 Dividend Aristocrats Constituents by Index Weight
PLC PentairPNR Enterprises
Black & Decker, StanleySouthwest Industrials Albemarle Corp.ALB Supplies Caterpillar Inc.Nordson Corp. CAT Industries Sherwin-Williams Co. SHW MaterialsNDSN Industries, Inc. – Automatic Data ProcessingADP Enterprises
Brown and Brown, Inc.International Business Machines Corp. BRO FinancialsReal Estate IBM Information Technology ESS Property Trust
S&P Dow Jones Indices is the source.
Investing in Exchange-traded funds (ETFs) that track the S&P 500 Dividend Aristocrat is a well-liked method of getting exposure to this list. An example of a well-liked fund that tracks the index exactly is the ProShares S&P 500 Dividend Aristocrats ETF (NOBL).
The iShares Select Dividend ETF (DVY), the SPDR S&P Global Dividend ETF (WDIV), and the iShares Core High Dividend ETF (HDV) are other funds that track dividend equities without directly following the index. Since the universe of constantly growing dividend issuers isn’t all that broad, each fund tends to incorporate some “aristocrats,” even if they’re not seeking to follow the index.
Investing in S&P 500 Dividend Aristocrats: How Do I Do It?
Purchasing an index-tracking fund, such as one of the several SPDR Aristocrats ETFs, is the optimal investment method in the S&P 500 Dividend Aristocrats index.
ProShares S&P 500 Dividend Aristocrats: What Is It?
ProShares’ exchange-traded fund (ETF), ProShares S&P 500 Dividend Aristocrats, aims to mimic the performance of the S&P 500 Dividend Aristocrats Index. It makes it possible for investors to participate in the index and earn profits without buying individual shares of every firm included in the index.
Is Dividend Paying on the S&P 500?
Since the S&P 500 is an index, direct investments are not possible. However, you can invest in index-tracking funds like the SPDR S&P 500 ETF. These funds provide you with dividend payments when you invest in them.
The Final Word
Purchasing funds that mirror the S&P 500 Dividend Aristocrat Index may be wise for dividend investors since the index comprises businesses that have steadily increased dividends for at least 25 years. Stocks get significant income component value via dividends.
Conclusion
- The S&P 500 Dividend Aristocrats Index is a collection of S&P 500 firms that have increased their dividends for at least 25 years. These companies are primarily well-known large-cap blue-chip corporations.
- Stocks with a market capitalization adjusted for a float of at least $3 billion and an average daily trading volume of at least $5 million are included in the S&P 500 Dividend Aristocrats Index.
- If a firm does not raise its dividend or is removed from the S&P 500 Index, it may be excluded from the S&P 500 Dividend Aristocrats Index.
