Dividend Aristocrats are a rare breed of companies that have not just paid out regular dividends but increased its dividends for at least 25 years. The S&P tracks this list of companies and has an index for it - the S&P500 Dividend Aristocrats index. There is also an ETF tracking these dividend aristocrats that we can buy - NOBL, managed by Proshares. This post draws data from Proshares’ website below.
https://www.proshares.com/our-etfs/strategic/nobl
Ironically, while anyone can tell this would be a superior class of companies (only 67 of them) vs the S&P500, the dividend aristocrats has not outperformed the S&P500 over the last 5-10 years. According to the chart below, it has underperformed by c.1.6%pa since inception of the ETF. It could be just the signs of our times. The Magnificent Seven (Apple, Amazon, Google, Meta, Microsoft, Nvidia and Tesla) rules today and none of them are in the S&500 Dividend Aristocrats.
In terms of sector breakdown, the dividend aristocrats are also skewed towards consumer and industrials, with IT and tech constituting only 3.3%. In contrast, thanks to the Magnificent Seven, the tech weight for S&P500 is 29% even though Amazon and Tesla are in Consumer Discretionary.
While they are called dividend aristocrats, the aggregated average dividend yield is actually not that high at c.2.5% and that’s because the share prices of these 67 companies trade at high valuations due to their earnings stability. Average PER is 22.6x and average PBR is 3.8x. Most of them are household names and the most prestigious of them have grown dividends for 50-60 years (see below).
The Proshares ETF NOBL is one of the few ETFs tracking the S&P500 Dividend Aristocrat and was incepted in 2013. It boasts net assets of c.USD12bn and has low expense ratio at 0.35%. $10,000 invested its inception would be worth $29,500 today. With its constituents’ strong fundamentals, we should expect the same level of compounding (c.10%pa) and hence we can expect to 2.9-3x our money in 10-11 years.
Full list of companies as of this writing:
General Dynamics
CH Robinson Worldwide Inc
Expeditors International of Washington Inc
Brown Forman Corp
Coca Cola Co,
Pepsico Inc
AbbVie Inc
A O Smith Corp
Franklin Resources Inc
S&P Global Inc
T Rowe Price Group Inc
Air Products and Chemicals Inc
Albemarle Corp
Ecolab Inc
Linde PLC
PPG Industries Inc
Sherwin-Williams Company
Cintas Corp
Sysco Corp
Target Corp
Walgreen Boots Alliance Inc
Walmart Inc
Amcor PLC
Genuine Parts Co.
NextEra Energy Inc
Emerson Electric Co.
Archer-Daniels-Midland Co.
Hormel Foods Corp
J M Smucker Co.
McCormick & Co. Inc
Atmos Energy Corp
Abbott Laboratories
Becton Dickinson & Co.
Medtronic PLC
Cardinal Health Inc
McDonald’s Corp
Church & Dwight Co.
Clorox Co.
Colgate-Palmolive Co.
Kimberly-Clark Corp
Procter & Gamble Co.
3M Co.
Aflac Inc
Brown & Brown Inc
Chubb Ltd
Cincinnati Financial Corp
International Business Machines Corp
West Pharmaceutical Services Inc
Caterpillar Inc
Dover Corp
Illinois Tool Works Inc
Nordson Corp
Pentair PLC
Stanley Black & Decker Inc
Nucor Corp
Consolidated Edison Inc
Chevron Corp
Exxon Mobil Corp
Kenvue Inc
Johnson & Johnson
Automatic Data Processing Inc
Essex Property Trust Inc (REIT)
Federal Realty Investment Trust (REIT)
Realty Income Corp (REIT)
Roper Technologies Inc
Lowe’s Co.s Inc
WW Grainger Inc
As part of my wealth enhancement strategy, I have bought the Proshare NOBL ETF, and will hope to buy the S&P500 ETF, on a regular basis, as described in this earlier post.
Huat Ah!
Main blog:
http://8percentpa.blogspot.com/
This post does not constitute investment advice and should not be deemed to be an offer to buy or sell or a solicitation of an offer to buy or sell any securities or other financial instruments.