A very privileged club:  S&P 500 Dividend Aristocrats

While dividends should not be the sole reason for choosing an investment, some investors do place a high priority on dividend payouts.  Given that over the past 90 years, dividends have contributed about 30-40 percent of the total return of stocks, it might be a wise decision to emphasize dividend payouts when considering investing in a company.

Research shows that dividend payers actually perform better over long stretches of time. More importantly, that same research shows companies that increase their dividends each year over the long run perform even better—and by a considerable margin. Clearly dividend growth is associated with financial strength, growth in earnings and a more solid business franchise.  Dividends also provide some sort of cushion during adverse markets.  However, even the best dividend payments cannot compensate when there are severe declines in a company’s stock during a bear market or a correction.

In fact, Standard and Poor’s, the owner of the popular S&P 500 benchmark created an index called the S&P 500 dividend aristocrats index.  To be a member of the coveted list requires two criteria:  1) the candidate must be in the S&P 500.  2) The candidate must have a record of not only paying dividends, but increasing its dividend payout each and every year for 25 years.

The equal weighted index has done so well that, the financial industry has launched several mutual funds based on these indexes.  Profunds, is the most notable and has several funds that duplicate the strategy and invest in each of the companies that qualify in equal amounts.

There are currently 52 members of the Dividend Aristocrats club and a nice chunk of them are health care issues (see list below) that have or will be covered by In Sickness and Wealth in the future.

All the best,
Dave Lerman

 

Health Care Members of the S&P 500 Dividend Aristocrats
Business Yield
HCP Nursing homes, hospitals, medical offices 7.75
Abbvie Pharmaceutical 4.06
Johnson and Johnson Pharmaceutical, health care, etc 2.84
Abbott Laboratories Pharmaceutical 2.63
Medtronic Medical devices 1.97
Cardinal Health Pharmaceutical distribution 1.87
Walgreens Boots Alliance Pharmacy retailer 1.86
Becton Dickinson Medical Equipment/Supplies 1.78
C.R. Bard Medical Devices 0.49
Sigma Aldrich Biochemistry, chemicals ACQUIRED
Source: In Sickness and Wealth Research, Bloomberg

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