S&P 500 Dividend Aristocrats Index
Candlefocus EditorInvestors looking for stocks with steady income streams and a track record of dividend growth typically turn to the S&P 500 Dividend Aristocrats Index for direction, as this index provides a list of companies that have increased dividends for at least 25 consecutive years. Companies included in the S&P 500 Dividend Aristocrats Index tend to be part of the consumer staples and consumer discretionary sectors, as well as the health care and energy sectors.
The list of S&P 500 Dividend Aristocrats is updated semi-annually, after the end of the second and fourth quarters each year. Any dividend increases announced in the third or fourth quarter will be taken into consideration when making updates to the list of companies included in the index. If a company’s dividend is cut or if the stock is removed from the S&P 500 while not having already been cut from the S&P 500 Dividend Aristocrats Index, the company will be dropped from the list.
The S&P 500 Dividend Aristocrats Index has outperformed the S&P 500 Index and the S&P MidCap 400 Index over the past several years and is widely viewed as one of the best investments for generating long-term wealth. Companies in the index have also typically exhibited lower volatility and less risk than the S&P 500 Index.
The S&P 500 Dividend Aristocrats Index is widely followed by both active and passive investors and is included in a range of investment products, such as mutual funds, exchange-traded funds (ETFs), and index funds. The Dividend Aristocrats ETF (NOBL), which is passively managed and tracks the S&P 500 Dividend Aristocrats Index, is one of the largest and most popular ETFs with dividend-focused strategies.
There are also other strategies to consider such as sector funds, real estate investment trusts or dividend paying stocks. Nonetheless, The S&P 500 Dividend Aristocrats Index is an excellent benchmark of quality companies producing a solid and consistent track record of dividend growth which can provide investors with long-term wealth creation potential.