Are Dividend Aristocrats Good For Your Growth Portfolio?
Are dividend aristocrats good for your growth portfolio? If you answered yes, you are on the right track. In this article, we'll discuss the benefits of dividend aristocrats, as well as the three top yielding dividend aristocrats. But before you make your move, consider the risks and benefits of Dividend Aristocrats. And remember: diversification is the key to growth-oriented investing.
Are dividend aristocrats good for growth
Is it really possible to beat the S&P 500 by almost four times over the next decade with a modest investment? Yes, it is possible. But previous performance is not necessarily indicative of future results. Blue-chip companies with sound fundamentals are usually good investments. You can expect predictable returns based on valuation mean reversion, growth, and yield. The average growth rate of dividend aristocrats is 17.5%, while analysts expect total returns of 14.6%.
Dividend aristocrats have the advantage of being stable companies that have maintained high levels of dividend growth for several years. The average streak of dividend growth for aristocrats is 48 years and 2.5X Graham's standard of excellence. The average return on capital (ROC) of dividend aristocrats is 254%. The aristocrats also have improved moats and wide dividend yields.
The S&P 500 Dividend Aristocrats index tracks companies that have increased dividends for 25 consecutive years or more. This index tracks 66 S&P 500 Dividend Aristocrats, as well as the S&P 500 Index. Dividend Aristocrats are equally-weighted and rebalanced quarterly. They are well-diversified across industries and sectors.
Top 3 yielding dividend aristocrat stocks
One thing to note is that each one of these stocks has outperformed the S&P 500 year to date. S&P 500 is down nearly 14% as of the post of this article. Keep in mind that David and aristocrats generally beat the S&P 500 in a bear market.
1. IBM – International Business Machines Corp. Boasts a 5.22% dividend yield annually. IBM is down 2.82% year to date.
2. NNN - National retail properties Inc.. The yearly dividend yield reaches to 4.95% this year. National retail properties is down 8.55% this year.
3. MCY - Mercury General Corp.. 4.86% is the dividend yield. Mercury general is down 5.35% year to date.
Income investors often turn to bonds when they are looking for a higher yield, but today's low interest rates make the stock market a better bet for investors. Many stocks offer payoffs that far exceed the 10-year Treasury note, which pays less than 2%. To qualify, the company must be a member of the S&P 500 and have a 25-year record of dividend increases.
Dividend Aristocrats outperform the S&P 500 Index throughout bear markets and exhibit lower volatility than the market as a whole. The strong balance sheets and sound fiscal corporate governance of these companies allows them to offer superior long-term returns. These dividend growth stocks can be bought at attractive valuations. And because the dividends are paid from free cash flow, there's no need to worry about them stopping paying dividends in the future.
Wrap it all up, Dividends aristocrats perform admirably in bearish markets. Not only that but the three that I posted above have the top three highest dividend yield out of all of the dividend aristocrat companies. Depending on how the market affects these companies might also be an opportune time to buy in at a discounted rate.