2 Dividend Aristocrats (And 1 Former Aristocrat) Income Investors Should Avoid

The list of Dividend Aristocrats, those companies that have raised dividends for at least 25 years in a row, is an illustrious group. For income investors, the Dividend Aristocrats are a great source of stocks to look for investment opportunities. After all, research has repeatedly shown that the majority of total stock returns have historically come from reinvested dividends.
But not all Dividend Aristocrats are created equal. The very best of them will continue to increase earnings and dividends for many years. On the other hand, there are some that are struggling with stagnating or deteriorating fundamentals. These companies have continued to increase dividends, but only by token amounts, to simply keep their streaks alive.
Here are two current Dividend Aristocrats, and one former Dividend Aristocrat, investors should avoid.
Not Very Aristocratic
The first Dividend Aristocrat I would avoid is Nucor (NYSE: NUE). Nucor has paid a dividend for 170 consecutive quarters and has raised its base dividend each year for 41 years. But its dividend growth rate has slowed down considerably in recent years. In fact, over the past five years, Nucor has increased its dividend by just 0.7% compounded annually. That is well below inflation.
The reason for this is because Nucor operates in a highly cyclical industry, steel production, which is struggling due to soft global demand for steel and collapsing commodity prices. Nucor's earnings grew 46% last year, to $2.22 per share.... Read more