What Other Dividend Lists Exist Besides the Dividend Aristocrats?

For me, stock indexes and/or stock lists provide either a starting point for my research or an investment opportunity if a particular fund invests in that list or index.  Each time I have written a post about my Dividend Investment Portfolio I indicated that I use the Dividend Aristocrats as a starting point.  I let Standard and Poors do the work for me eliminating probably close to 98% of the listed companies in the country using the following criteria:

  1. Be a member of the S&P 500 index
  2. Have increased dividends every year for at least 25 consecutive years
  3. Have a float adjusted market capitalization of at least US$ 3 billion as of the rebalancing reference date.
  4. Have an average daily trading volume of at least US$ 5 million for the six months prior to the rebalancing reference date.

I was recently thinking what if there are some great undervalued dividend centric investment companies out there that maybe aren’t on the S&P500 Index or maybe they have provided a rising dividend for 18 years instead of 25…do I really want to cut them out?

Additional Dividend Lists

There are two other dividend investing lists that I may start to check out:

Dividend Achiever List

The Dividend Achiever Index is the basis for many ETFs and contains over triple the amount of companies that are on the Dividend Aristocrats.  The requirements to be on the Dividend Achiever Index are:

companies that have increased their annual regular dividends for at least the past 10 consecutive years and have met specific liquidity screening criteria. The Dividend Achievers are typically companies with strong cash reserves, solid balance sheets and a proven record of consistent earnings growth.

What intrigues me about this particular index is that they pull companies from not only the S&P 500 but all American Stock Exchanges.  While 10 years is a very long time to continually increase a company’s dividends it is obviously not as substantial as a quarter century.

Dividend Champions List

The Dividend Champions list was created and is still maintained by David Fish over at The DRiP Investing Resource Center.  While the information on the site is interesting and very comprehensive the site looks like something that was built in 1999 and never updated.  Very odd. The members of the Dividend Champions List include, those stocks (not limited to the S&P 500) that have increased their dividend for the past 25 years.  Since it isn’t limited to the S&P 500 it has a broader base of members.

Additionally the Dividend Champions List has a different definition of what constitutes a dividend increase,

The initial goal was to identify companies that had increased their dividend for at least 25 consecutive years, but, as explained below, the definition was broadened to include additional companies that had paid higher dividends without having increased the quarterly payout in every calendar year.

It is a slight difference but the dividend aristocrats definition of a dividend increase may be a bit more limiting.

Which Dividend Investing Index or List I am Going to Use Going Forward

I think I am going to jump ship on the Dividend Aristocrats and start using the Dividend Champions as my first line of selection.  Whether the stock is part of the S&P doesn’t particularly matter when looking for undervalued quarter century dividend payers.

 

Which List or Index do you Use? Do you use any?

 

20 Responses to What Other Dividend Lists Exist Besides the Dividend Aristocrats?

  1. neither as yet but am considering the more i read about you talk about dividend investing.

    if you don’t mind sharing, in terms of strictly dividend returns, what’s your average annual blended/combined yield on the overall dividend portfolio (annualized/normalized) for the last 3 years?

    now in terms of overall returns (factoring in portfolio appreciation/depreciation), what is that yield for the same period?

    • Damn good questions Sunil!

      I started this experiment 18 months or so ago, so I can’t give a 3 year history. Additionally a huge problem is I had to switch brokers in mid summer so being able to provide that answer is spotty at best!

      I am not sure if this will provide a bit of satisfaction but as of today (actually right now 10/28/11 11:54am) my portfolio says “Up since purchase” about 5.23%

      I am not sure I can just give a number on yield (other than this is what I am being taxed on lol) considering some of my holdings are 1.04 shares and others are 30 shares…would be a HUGE pain

      I think you inspired me to write a post talking about the details!

  2. so up 5.3% since opening/inception which means it’s a rolling rate i assume? what i am getting at is that don’t you think you can do better? or is the objective here to build a cash flow portfolio? but even if that is so, how do you hedge the risk of capital depreciation, which the dividend (in gross terms) is also predicated on (since it’s a percent of value)? just trying to peak into your thought process.

    lol @ the inspiration. i look forward to the details. you know me man, always looking for the most bang for the least effort – and i’d love to add a new stream to the bigger picture.

    thanks!

    • Yup rolling since it is just my portfolio minus basis. Yes, my goal is to build a stable income producing asset.

      Could I do better? Probably, I am doing MUCH better than 5.3% (probably closer to 200% or 300%) for money put into my websites…but what do I do with the cash I earn from that enterprise? Reinvest yes, but also pump it into this income stream.

      My hope one day is that in a decade or two is that I can turn on this income stream and have healthy PASSIVE income stream.

      • i concur – very nice plan. didn’t know you had other websites. would love to take a look. email me if you don’t feel comf disclosing here?

  3. Thanks for this post. I also find myself drawn to finding some reliable dividend paying stocks (and hopefully those that increase them continually). There resources will help. Keep up your great work on this blog.

    There are obviously tons of blogs about investing and personal finance, but when you add the qualifier of useful, that number drops quickly. Yours passes that screen though :-)

    • Thanks a lot John I really appreciate it.

      There is something that draws me to dividend paying stocks – I feel like without that payout I am just hoping someone else will think the stock is more valuable one day.

  4. “Have increased dividends every year for at least 25 consecutive years” But isn’t that using a lagging indicator? It’s similar to how investors tend to invest in hedge funds after they’ve done well for a few years. One should invest after a fund has lost some money.

    • Interesting contrary view. I am going to say Yes and No. Yes if you believe money is going to flow into the stock on the 25th year…No when you take into account that some of the stocks have been on the index for 30, 40 and even 50 years.

      If you want a play the Dividend Champion list has a tab in the excel file for those that will soon be on the list (10 and 20 year payers).

  5. “…a rising dividend for 18 years instead of 25″ – Yeah, “why 25?” is my question. That’s older than some of my coworkers.

    Another interesting thing is S&P can get loose with its indexing requirements. In 2009 (sure I’m cherry-picking) 26% of companies didn’t meet the $3.0 billion market cap threshold.

    • Your second point is yet another reason why the Dividend Champion List might be a better one to look at.

      As far as the first point…I think it is arbitrary but you would say that the 18 year dividend payer has a better chance of continuing then lets say the 10, right? and the 10 more than the 2, right?

  6. I personally don’t invest in dividend stocks at the moment due to not having a tax free vehicle to invest in.. (I can’t use a roth) But, you did give me a great starting point and some ideas for once I have a kid with a lower tax base.

    • I don’t have any investments in my Son’s name…and if you are thinking about going that route I would look up “Kiddie Tax.”

      The account I refer to is actually non-qualified because I am looking to turn on the income stream eventually.

  7. For these lists, are there ETF’s/Mutual Funds that follow them? Or are you looking more at the lists as a way of picking up individual companies over time? (Just wondering some ways to take advantage of some great dividend companies in one shot).

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