One of the time-tested strategies for investors is buying companies with an increasing dividend policy. To say it is one of the most loved and most watched strategies would be something of an understatement given the incremental income it generates for investors and the $6.7 billion in assets held by ProShares S&P 500 Dividend Aristocrats exchange-traded fund (NOBL) , which tracks the S&P 500 Dividend Aristocrats Index. If there was any question as to the results of the strategy of buying a portfolio of companies with a long history of boosting their dividends, the below chart should be enough of an answer:
The companies that comprise the S&P 500 Dividend Aristocrats Index are a cross-section of S&P 500 constituents that have increased their dividends for at least 25 years. The index is equal-weighted in nature, which means the position size for each is the same, and the qualifying universe of companies is reviewed each January. In addition, per the index’s methodology document, prospective index constituents must also have a minimum float-adjusted market cap of at least $3 billion at the time of the rebalance data and have an average daily value traded of at least $5 million for the three months prior to the rebalancing reference date.
Last year, four companies were added to the Dividend Aristocrats: Caterpillar (CAT), Chubb Limited (CB), People’s United Financial (PBCT) and United Technologies (UTX), which lifted the number of constituents to 57 up from 53 in 2018. With January 2020 having come and gone, the S&P has added…
- Albemarle Corp. (ALB), Realty Income (O), Ross Stores (ROST) are constituents in Tematica Research’s Thematic Dividend All-Stars Index.