Tuesday, December 20, 2011

The 2012 Dividend Aristocrats

The S&P 500 Dividend Aristocrats is the most recognized list of dividend stocks. The Dividend Aristocrats index is designed to measure the performance of S&P 500 constituents that have followed a policy of consistently increasing dividends every year for at least 25 consecutive years. This index is a member of the S&P Dividend Aristocrats index series.

Dividend Aristocrats constituents exhibit the following characteristics:

- Underlying Indices – S&P 500
- Weighting – Equally weighted; Constituents re-weighted quarterly
- Reconstitution – Reviewed annually in December

Among others, Dividend Aristocrats include these highly recognizable names, with years of consecutive dividend increases shown:

- 3M Co. (MMM) - 53 years
- Abbott Laboratories (ABT) - 39 years
- Clorox Co (CLX) - 36 years
- Coca-Cola Co (KO) - 49 years
- Exxon (XOM) - 29 years
- Johnson & Johnson (JNJ) - 49 years
- McDonald’s Corp (MCD) - 35 years
- Procter & Gamble (PG) - 55 years
- Wal-Mart Stores (WMT) - 37 years

Members may be deleted during the December rebalance if calendar-year dividends did not increase from the previous year, or intra-year if the stock is removed from the underlying S&P 500. For the first time this year, only regular dividend payments will be considered when determining the calendar year total dividend payments of a company. Special cash dividends are ignored for eligibility purposes on a historical and ongoing basis.

On December 1st, S&P announced changes to the Dividend Aristocrats Index. Standard & Poor’s will perform the annual reconstitution of the S&P 500 Dividend Aristocrats Index after the close of trading on Friday, December 16, 2011.

The following stocks will be added to the Dividend Aristocrats:

- AT&T Inc. (T) | Yield: 6.0%
- HCP Inc. (HCP) | Yield: 4.9%
- Sysco Corp. (SYY) | Yield: 3.8%
- Nucor Corp. (NUE) | Yield: 3.7%
- Illinois Tool Works Inc. (ITW) | Yield: 3.1%
- Genuine Parts Co. (GPC) | Yield: 3.1%
- Medtronic Inc. (MDT) | Yield: 2.7%
- Colgate-Palmolive Co. (CL) | Yield: 2.6%
- T Rowe Price Group Inc. (TROW) | Yield: 2.3%
- Franklin Resources Inc. (BEN) | Yield: 1.1%

After failing to increase its dividend, the following stock will be dropped from the Dividend Aristocrats:

- CenturyLink Inc. (CTL) | Yield: 8.2%

It is good to see that only one stock fell off the list this year after losing 3 in 2010. This year's list, with a net increase of 9 companies, is in stark contrast to the 2009 list with a net decrease of 8 companies. During good times it is easy for companies to increase dividends, and many companies are added to the index. It is during times of adversity that we learn who the real aristocrats are.

Full Disclosure: Long MMM, ABT, CLX, KO, JNJ, MCD, PG, WMT, T, HCP, SYY, NUE, ITW, GPC, MDT, CL, CTL. See a list of all my dividend growth holdings here.

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(Photo Credit)

Tags: [MMM] [ABT] [CLX] [KO] [XOM] [JNJ] [MCD] [PG] [WMT] [T] [HCP] [SYY] [NUE] [ITW] [GPC] [MDT] [CL] [TROW] [BEN] [CTL]