The word “aristocrat” usually implies an image of elite status and this is exactly what the term means within the investment world. Dividend aristocrats are companies in the Standard & Poor’s 500 that have managed to increase dividends during the previous 25 consecutive years. Not all companies can claim this achievement so those who can deserve special recognition.
The 2010 Dividend Aristocrat list contains only 43 companies, a decrease of eight from the 2009 list. Cintas, a well-known uniform company, and Brown-Forman, the producer of Jack Daniels, were added to the list this year. Companies dropped between 2009 and 2010 include recognizable names like Pfizer, Legg Mason, Avery Dennison, and General Electric.
Not all companies on this list are truly noteworthy because some are downright imposters. These companies raised annual dividends per share but actually decreased their total payout. Some experts found that 14 of the 43 companies had done this at some point during the past decade. The most notable of these are Pitney Bowes, Sherwin Williams, Exxon Mobil, Clorox, and Consolidated Edison.
The large cap, blue chip companies on the S&P 500 Dividend Aristocrat Index list have an adjusted market cap of $1.65 billion and a year to date total return of 9.23 percent. The top five companies, in order of market cap, are: Archer-Daniels-Midland, AFLAC, Air Products & Chemicals, Dover Corp, and Family Dollar Stores. Other recognizable names in the top ten include Coca-Cola and Grainger. The companies on the list range the gamut from utilities, to consumer products, to financial entities.
The smaller number of 2010 Dividend Aristocrats reinforces the notion that dividend stocks have faced difficulties in the past two years. It is easy for companies to increase their dividends during positive economic times. It is when the economy is at its worst that the true aristocrats are revealed.