6 Dividend Aristocrats Worth Considering

In a continued effort to expand the focus of my site's screens and hypothetical portfolios, this article is a third follow-up to an article written in early April focusing on the S&P 500 Dividend Aristocrats. The S&P 500 Dividend Aristocrats index measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years. The current list has 43 constituents and the entire list is available from S&P or on my site. If an investor's portfolio was large enough he or she could consider purchasing the entire list. Alternatively, an investor could invest in the SDY, the SPDR Dividend ETF, which is a variation of the Aristocrats - it seeks to replicate the “High Yield” Dividend Aristocrats Index. A third alternative is to start with the Aristocrat list and then reduce the list of candidates through screens and/or fundamental analysis. I screened for Aristocrats which had a sustainable payout ratio, a high dividend yield, reasonable debt/equity ratio, and moderately positive return on assets and equity. Using Finviz, which has some of the better screeners and charts available, I screened the Aristocrat list for: Payout Ratio < 80%, Dividend Yield > 3% Return on Assets > 10% Return on Equity > 10% Total Debt/Equity < 1 Below is a list of 6 Aristocrats which are worthy of further consideration, especially if one is seeking yield or seeking to reduce exposure to non-dividend paying companies. All of the companies on the list are familiar names and they were also all on last month's list which tells me this could be a relatively low turnover strategy. Another thought is to hedge the list with a short position in the S&P 500 is below its 200 day moving average. One such vehicle for doing so is SH. Obviously, hedging could reduce returns but also reduce drawdowns and volatility. Or, an investor could only purchase stocks which are above its 200 day moving average. Ticker Company Free Trend Analysis Dividend Yield Payout Ratio 200-Day SMA Price LLY Eli Lilly & Co. Here 5.58% 52.87% 2.21% 35.15 JNJ Johnson & Johnson Here 3.79% 40.66% -7.77% 57.02 ABT Abbott Laboratories Here 3.59% 47.77% -3.58% 49.01 KO The Coca-Cola Company Here 3.24% 54.40% 1.12% 54.26 MCD McDonald's Corp. Here 3.08% 48.79% 10.97% 71.4 MHP The McGraw-Hill Companies, Inc. Here 3.06% 37.21% -3.00% 30.71 Disclosure: No positions... Read more