2021 Dividend Aristocrats List – The 65 S&P 500 Dividend Growers

The 2021 Dividend Aristocrats

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The 2021 dividend aristocrats List was finally made official when S&P Global announced changes to their S&P 500 Dividend Aristocrats Index.

If you’re not familiar with the dividend aristocrats, it’s a group of stocks in the S&P 500 that have paid AND raised their dividends for 25 years straight or more. There’s some market cap and liquidity requirements as well. If you just want to see the list, scroll down to the bottom or hit 1.3 on the table of contents above!

This group of companies have historically been able to generate solid long term returns through a combination of steady dividends, dividend growth and price appreciation. I did a full post about the dividend aristocrats and why I invest in them but long story short, the long term returns are better than the S&P 500 with less volatility. The reason for that is simple, consistency.

While they often lag stocks during bull markets like the one we’re in now(They returned 28% in 2019 against 31% for the S&P 500 and 8.7% in 2020 against 18.40% for the S&P 500), they have a tendency to be a lot more resilient when things get sour.

Take a look at these returns during the run-up and subsequent crash of the 2000 bull market. I’ve also included what $1000 dollars invested at the beginning of 1997 would look like to better visualize what those returns mean.

2021 Dividend Aristocrats

While an investment in the S&P seemed like it was the obvious winner during the run-up, outperforming the boring dividend aristocrats by quite a bit, by the time the market corrected, the boring investor was up against the S&P 500. You’d end up with $1,645.60 if you invested in the aristocrats versus $1,249.97 in the S&P 500.

In the end, slow and steady investing won the race and avoiding some of the high flying names(which are generally not present in the dividend aristocrats due to the need for long term dividend growth) was a winning strategy. In fact, $1,000 invested in the dividend aristocrats in 1991 when tracking began is worth $33,333 after 2020 while the same investment in the S&P 500 is worth $20,493.83.

You can see the math behind that in the spreadsheet here.

Going into 2021, the dividend aristocrats may not be the most exciting investments but their history of solid performance is always enticing especially this far into a bull market.

The group of stocks in this 2021 dividend aristocrats list won’t set the world on fire with their overall performance but in the long run, it has shown the capacity to do well. The recent hype around certain stocks and short-term triple digit returns that come with them certainly puts this type of investment in the background. However, that’s one of the reasons I like it going deeper into 2021 and beyond. This massive bull run has to stop somewhere and being in the dividend aristocrats when it does isn’t the worst place to be.

2021 Aristocrat Changes

One thing to note is that the dividend aristocrats list isn’t static. Companies can fall out of the group if they fail to meet the criteria of being a 25+ year dividend grower in the S&P 500(by cutting or not raising their dividend) and others can join if they hit that threshold(either by growing their 25th consecutive year of dividends or joining the S&P 500 having done so already).

In 2021, the index removed four companies. Ross Stores(ROST) fell out earlier in the year when they suspended their dividend. Raytheon Technologies(RTX), Otis(OTIS) and Carrier(CARR) were spin-offs when United Technologies merged with Raytheon and were removed because their dividend as three separate entities was lower than when they were combined under the UTX umbrella.

For 2021, the index added three companies which either grew their dividend for the 25th consecutive year or joined the S&P 500 for the first time while having done so already. These three companies are IBM(IBM), NextEra Energy(NEE) and West Pharmaceutical Services(WST).

Dividend Aristocrats Risks

While the dividend aristocrats have done well since 1991, the short-term risks still exist as they do with all stocks and this investment is not without long-term risks as well.

The obvious risk is one of dividend cuts. This list is made up entirely of long-term dividend growers and the market has a tendency to lend some premium to how it prices these type of companies. Recessions and bear markets tend to take a toll on this list and reduce overall performance as companies drop off due to cuts or suspensions.

You can see that in the removal of companies like ROST which suspended their dividend during a tough period for retail companies.

However, the long term performance above does take into account the removal of such companies and replacements with new ones and still shows outperformance during bear markets.

Also as with all stocks, risk of loss is always present even if this group of stocks has had lower losses in bear markets. Losses are still losses even if they’re smaller although it might be easier to stick it out if you’re down 10% versus 30%. If you do stick it out, another good thing about this strategy is the continued payment of dividends(if not cut) and re-investment at lower prices.

Another common concern around investing in dividend aristocrats these days is their under allocation to tech. It’s certainly a valid complaint. After all, the index requires 25 years of consecutive and growing dividend payments. I bet a good percentage of the best performing stocks in the S&P 500 or the Nasdaq in the past two years haven’t even been around for 25 years.

The fact that IBM is finally joining the index is the perfect reflection of that under allocation to tech. When a tech company does join the index, it’s an old dinosaur like IBM.

Since tech is under allocated, other sectors may be over allocated. Industrials, consumer staples, materials and financials make up 67% of the index with tech only representing 1.7%. If those sectors under-perform then this index will lag as well as it has in recent years due to tech’s strength.

Investors have to decide whether tech is a must when it comes to their investing strategy and allocate as needed knowing that this strategy doesn’t capture it effectively. While this has not been a problem when it comes to long-term historical returns, it may certainly be a problem going forward. Avoiding high flying tech stocks has certainly made this a laggard in recent years.

Personally, I agree that this is a major flaw in the index and I like to diversify my active holdings by also investing in growth stocks. I also keep most of my money passive investments like the S&P 500 simply because it’s simple and available in my 401k and a much more known long-term entity.

While this strategy has out-performed the S&P 500 since tracking started in 1991, nothing is certain and active trading strategies do have flaws that might come up. Lacking tech in a world that’s certainly more tech oriented than it has ever been certainly might be one of those.

Still even without tech, this group of stocks has a lot of companies that have shown an ability to raise dividends for decades through thick and thin. There’s something to be said about that type of consistency and even with tech becoming a bigger part of life, people still need certain simple things and many of these companies have that covered with droves.

2021 Dividend Aristocrats List

Here is the list of 2021 Dividend Aristocrats as of the latest allocation which will be effective 2/1/2021. I’ve also included their yield, 5 year dividend growth rate and how long they’ve raised their dividend.

The list can also be found on this google spreadsheet that includes some more information about the stocks such as share price and EPS along with the annual dividend and yields and 5 year dividend growth rates.

Company Ticker Yield 5 Year Dividend Growth Consecutive Years of Dividend Growth
3M Co (XNYS:MMM) MMM 3.34% 7.48% 48
A. O. Smith Corp (XNYS:AOS) AOS 1.90% 20.86% 48
Abbott Laboratories (XNYS:ABT) ABT 1.57% 8.45% 45
Abbvie Inc (XNYS:ABBV) ABBV 4.77% 18.50% 46
Aflac Inc (XNYS:AFL) AFL 2.83% 7.23% 38
Air Products and Chemicals Inc (XNYS:APD) APD 1.92% 12.34% 26
Albemarle Corp (XNYS:ALB) ALB 0.87% 5.83% 26
Amcor PLC (XNYS:AMCR) AMCR 4.19% N/A 27
Archer Daniels Midland Co (XNYS:ADM) AMD 1.51% 5.15% 39
AT&T Inc (XNYS:T) T 7.00% 2.04% 37
Atmos Energy Corp (XNYS:ATO) ATO 2.74% 8.13% 49
Automatic Data Processing Inc (XNAS:ADP) ADP 2.25% 12.85% 41
Becton Dickinson and Co (XNYS:BDX) BDX 1.28% 5.40% 37
Brown-Forman Corp (XNYS:BF.B) BF.B 0.99% 6.84% 26
Cardinal Health Inc (XNYS:CAH) CAH 3.48% 5.22% 27
Caterpillar Inc (XNYS:CAT) CAT 2.20% 6.98% 27
Chevron Corp (XNYS:CVX) CVX 5.77% 3.81% 60
Chubb Ltd (XNYS:CB) CB 2.06% 3.04% 57
Cincinnati Financial Corp (XNAS:CINF) CINF 2.76% 5.72% 43
Cintas Corp (XNAS:CTAS) CTAS 0.92% 21.76% 38
Clorox Co (XNYS:CLX) CLX 2.10% 7.52% 34
Coca-Cola Co (XNYS:KO) KO 3.33% 4.44% 65
Colgate-Palmolive Co (XNYS:CL) CL 2.23% 3.13% 29
Consolidated Edison Inc (XNYS:ED) ED 4.40% 3.31% 47
Dover Corp (XNYS:DOV) DOV 1.59% 8.28% 64
Ecolab Inc (XNYS:ECL) ECL 0.91% 7.12% 26
Emerson Electric Co (XNYS:EMR) EMR 2.46% 1.24% 26
Essex Property Trust Inc (XNYS:ESS) ESS 3.40% 5.11% 53
Expeditors International of Washington Inc (XNAS:EXPD) EXPD 1.10% 7.63% 29
Exxon Mobil Corp (XNYS:XOM) XOM 7.57% 3.86% 64
Federal Realty Investment Trust (XNYS:FRT) FRT 4.77% 3.11% 49
Franklin Resources Inc (XNYS:BEN) BEN 4.04% 13.46% 55
General Dynamics Corp (XNYS:GD) GD 2.92% 9.94% 25
Genuine Parts Co (XNYS:GPC) GPC 3.10% 5.14% 46
Hormel Foods Corp (XNYS:HRL) HRL 2.03% 13.21% 58
IBM (NYSE: IBM) IBM 5.35% 5.42% 49
Illinois Tool Works Inc (XNYS:ITW) ITW 2.27% 16.38% 58
Johnson & Johnson (XNYS:JNJ) JNJ 2.38% 6.17% 49
Kimberly-Clark Corp (XNYS:KMB) KMB 3.35% 3.99% 27
Leggett & Platt Inc (XNYS:LEG) LEG 3.72% 4.89% 58
Linde PLC (XNYS:LIN) LIN 1.66% 5.80% 45
Lowe’s Companies Inc (XNYS:LOW) LOW 1.38% 17.14% 43
McCormick & Company Inc (XNYS:MKC) MKC 2.83% 9.79% 35
Mcdonald’s Corp (XNYS:MCD) MCD 2.40% 7.94% 62
Medtronic PLC (XNYS:MDT) MDT 1.98% 9.55% 26
NextEra Energy Inc. (NYSE:NEE) NEE 1.64% 12.70% 48
Nucor Corp (XNYS:NUE) NUE 3.06% 1.56% 26
Pentair PLC (XNYS:PNR) PNR 1.42% N/A 28
People’s United Financial Inc (XNAS:PBCT) PBCT 4.94% 1.46% 48
PepsiCo Inc (XNAS:PEP) PEP 2.88% 7.80% 64
PPG Industries Inc (XNYS:PPG) PPG 1.52% 8.22% 45
Procter & Gamble Co (XNYS:PG) PG 2.37% 3.44% 49
Realty Income Corp (XNYS:O) O 4.60% 4.21% 28
Roper Technologies Inc (XNYS:ROP) ROP 0.54% 15.44% 42
S&P Global Inc (XNYS:SPGI) SPGI 0.84% 15.22% 47
Sherwin-Williams Co (XNYS:SHW) SHW 0.74% 14.87% 53
Stanley Black & Decker Inc (XNYS:SWK) SWK 1.59% 5.37% 51
Sysco Corp (XNYS:SYY) SYY 2.42% 14.87% 37
T. Rowe Price Group Inc (XNAS:TROW) TROW 2.24% 11.73% 53
Target Corp (XNYS:TGT) TGT 1.44% 4.41% 34
VF Corp (XNYS:VFC) VFC 2.29% 9.04% 48
W W Grainger Inc (XNYS:GWW) GWW 1.62% 5.29% 45
Walgreens Boots Alliance Inc (XNAS:WBA) WBA 3.82% 11.84% 47
Walmart Inc (XNYS:WMT) WMT 1.46% 1.96% 28
West Pharmaceutical Services Inc. (NYSE: WST) WST 0.23% 7.63% 38

That’s it, the 2021 dividend aristocrats list. As you can see, there’s a lot of familiar names in there and there’s a reason this index has done so well across the years. It’s important to note that the index will still decline in rough times(it declined nearly 22% in 2008 but that was still almost 20% better than the S&P 500) so while it’s a “safer” investment historically, stocks will always decline in tandem during bear markets.

However, the presence of common household names that have historically continued to grow dividends despite rough times is one of the reasons this index has outperformed the S&P 500 as it’s seen as more of a safe haven during rough times.

This can be a good thing when you’re not certain if the bull run can continue.

The question lies in which stocks are going to be the winners here?

That’s the beauty of this investing strategy. You don’t have to choose, just invest in them all. Are there companies I don’t really like here? Sure, but my ability to select whether or not they’ll be good performers(or continue to grow their dividend) in the next decade is probably not very good.

After all, the numbers above and the level of outperformance against the S&P 500 is based on owning all the stocks. If I had to guess the winners going into 2020, I’d probably not have assumed that Albemarle and Target would be the big winners. That’s why it’s simpler to just invest in them.

There’s an ETF that tracks these guys called NOBL but I personally invest via an M1 Finance pie that I keep updated that tracks all of these stocks. That way each contributions gets sent to the few stocks that are under-weight and I can avoid the ETF fees.

With the current allocations and prices, it’s a 2.5% yield which isn’t amazing but you can bet that’ll grow across the years.

Just remember, this index tends to do well during bear markets so don’t expect a ton out of it if the current bull market stretches for years.

Disclosure : I own all 65 mentioned here via my M1 Portfolio.

Dividend Aristocrats List

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