During this year s bear market, the stocks of companies that raise dividends have outperformed.
Below is a screen showing which stocks are analysts favorites for next year among an expanded list of Dividend Aristocrats. Aristocrats with the highest dividend yields are followed by a list of them.
First let's define this group of stocks.
The S&P 500 Dividend Aristocrats Index SP 50 DIV is made of 63 stocks within the benchmark S&P 500 SPX that have raised regular dividends for at least 25 consecutive years. It doesn't matter how high or low a stock's current yield is, that's the only requirement. The S&P 500 Dividend Aristocrats Index has performed better against the S&P 500 this year through December 2 with dividends reinvested: Here s how the index is weighted and tracked by the ProShares S&P 500 Dividend Aristocrats ETF NOBL.
During this year s broad decline of stocks, investors have taken comfort in the Aristocrats. The indexes also have longer-term returns that show outperformance.
The S&P 500 Dividend Aristocrats Index has outperformed the S&P 500 for all periods on the table. The greatest outperformance has been for periods of 15 years or longer, which included the financial crisis in 2008 -- 2009 and the reversal of the dot-com bubble in the two years through October 2002.
You might also like to invest in NOBL, because it is an easy way to ride along with this group, but you might also be interested in individual aristocrats for long-term growth or income investments.
For a broad screen of Dividend Aristocrat stocks, we expanded our pool of companies by looking at two other aristocrat indices maintained by S&P Dow Jones Indices:
There are 134 companies in the three Dividend Aristocrats indexes, all removing duplicates.
At least five analysts polled by FactSet, we narrowed down the list to 119 covered by the list to be narrowed by enthusiasm among analysts working for brokerage firms.
Among the 119 Dividend Aristocrats, 10 have majority buy or equivalent ratings and 12 month upside potential of at least 10%, based on consensus estimates:
The dividend yields on the list are not particularly high.
Some investors favor high dividend yields for current income. A high dividend yield may be important if you are looking to generate current income, but it doesn't necessarily correlate with strong long-term total returns.
The price targets aren't included in the table because none of the stocks on this second list of highest-yielding Aristocrats has a majority buy or equivalent rating.
You can read Tomi Kilgore's detailed guide to the wealth of information for free on the MarketWatch quote page.
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