The Top 7 Dividend Aristocrats From 1989 To 2014

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 |  Includes: CL, CLX, DOV, EMR, FDO, ITW, JNJ, KMB, KO, LOW, MMM, PG, WBA, WMT
by: Sure Dividend

Summary

KO, MMM, DOV, JNJ, PG, EMR, & LOW are the only 7 businesses that have remained dividend aristocrats from 1989 to today.

A portfolio of these 7 stocks would have turned $10,000 into $336,431.75 today; a CAGR of 14.91%.

Top Dividend Aristocrats that resemble the 7 great dividend aristocrats of the last 25 years.

The Dividend Aristocrats are a select group of S&P 500 stocks that have paid increasing dividends for 25+ years and meet certain market cap and volume restrictions. In 1989, 26 businesses were on the Dividend Aristocrats list. Of these 26, only 7 are on the list today.

  • Dover (NYSE:DOV)
  • Emerson Electric (NYSE:EMR)
  • Johnson & Johnson (NYSE:JNJ)
  • Coca-Cola (NYSE:KO)
  • Lowe's (NYSE:LOW)
  • 3M (NYSE:MMM)
  • Procter & Gamble (NYSE:PG)

Source: List of Dividend Aristocrats from 1989 to 2014

Total Return

Each of these businesses has rewarded shareholders since 1989. The table below shows the compound annual return of each business from the beginning of 1989 to April 15, 2014.

Ticker

CAGR

DOV

12.94%

EMR

11.99%

JNJ

14.82%

KO

13.51%

LOW

19.65%

MMM

12.08%

PG

13.99%

Click to enlarge

The total stock market (with dividends reinvested) returned 10.09% over the same period. All 7 of these stocks outperformed the total market. A portfolio of these 7 stocks had a compound annual return of 14.91% for this period, well in excess of the stock market as a whole.

Similarities of Top 7

These businesses are well diversified within their broad industries (with the exception of Lowe's). Each business has multiple highly profitable brands, products, and/or services. The size and diversification within each business insulates them from downturns in any one product, service, or division. Size and diversification have made these businesses highly stable for the last several decades.

I have divided these businesses into 3 categories. There is some overlap between the categories. For example, Johnson & Johnson manufactures medical devices, while 3M has many consumer products.

Consumer Products

  • Procter & Gamble
  • Coca-Cola
  • Johnson & Johnson

Retail

  • Lowe's Corporation

Manufacturing

  • Emerson Electric
  • Dover
  • 3M

Current Dividend Aristocrats Similar to Top Historical Top Performers

The dividend aristocrats below are in the same industries as the 7 remaining dividend aristocrats from 1989. They have a top 3 return on assets in their industry; they are the most profitable dividend aristocrats in these industries.

Diversified Consumer Products
Company Ticker ROA
Colgate-Palmolive CL 16.50%
Clorox CLX 12.90%
Kimberly-Clark KMB 11.00%
Click to enlarge
Retail
Company Ticker ROA
Family Dollar FDO 10.10%
Walmart WMT 9.70%
Walgreen's WAG 7.50%
Click to enlarge
Diversified Manufacturing
Company Ticker ROA
3M MMM 13.80%
Illinois Tool Works ITW 10.40%
Dover DOV 9.50%
Click to enlarge

Conclusion

Investing in high quality businesses with a low probability of failure is an excellent way to generate high returns with low risk. We can't know ahead of time what businesses will be around 25 years from now, but we can analyze and learn from the past to construct a portfolio with a high probability of strong future returns.

Disclosure: I am long WMT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.