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Several recent articles here on Seeking Alpha have mentioned the S&P Dividend Aristocrats, which are members of the S&P 500 that have recorded at least 25 consecutive years of higher dividends. And while that seems a simple enough criterion to determine, there has been no shortage of confusion about the composition of that listing. A year ago, the list had shrunk to 42 companies, and the S&P recently announced three deletions and three additions for its 2011 list. Here's a good article on the subject.

The first problem is that one of the new components, Ecolab Inc. (NYSE:ECL), has just a 19-year streak of dividend increases, which begs the question of how it can be added to a listing that requires at least a 25-year streak. Searching at Standard & Poor's website reveals the fact that S&P has adapted the “Aristocrat” idea to produce an index and an ETF, both of which require a 50-stock membership roster. So, besides Ecolab, they have decided to include eight other companies that do not meet the requirement of a 25-year streak. By examining the holdings of the underlying ETF, I was able to determine that they are including the following companies (with number of years of increases):

Atmos Energy (NYSE:ATO), 23

Cardinal Health Inc. (NYSE:CAH), 21

Chevron Corp. (NYSE:CVX), 23

HCP Inc. (NYSE:HCP), 24

Mercury General (NYSE:MCY), 24

National Retail Properties (NYSE:NNN), 20

UGI Corp. (NYSE:UGI), 23

Westamerica Bancorp (NASDAQ:WABC), 19

Here's another mystery: ATO, NNN, UGI, and WABC do not even appear to be S&P 500 members.

In compiling the Dividend Champions list (found here) I know that there are 98 companies that have paid higher dividends for at least 25 years, so I decided to compare those to the components of the S&P 500, from which Standard & Poor's draws its Aristocrats. What I found was that there are not 41, but 52 companies in the S&P 500 that are Dividend Champions:

Aristocrat?

SP500 Constituent Name

Symbol

Years

Y

3M Co

(NYSE:MMM)

52

Y

Abbott Laboratories

(NYSE:ABT)

38

Y

AFLAC Inc

(NYSE:AFL)

28

Y

Air Products & Chemicals Inc

(NYSE:APD)

28

N

Altria Group Inc

(NYSE:MO)

42

Y

Archer-Daniels-Midland Co

(NYSE:ADM)

35

N

AT&T Inc

(NYSE:T)

27

Y

Automatic Data Processing

(NASDAQ:ADP)

36

Y

Bard, C.R. Inc

(NYSE:BCR)

39

Y

Becton, Dickinson & Co

(NYSE:BDX)

38

Y

Bemis Co Inc

(NYSE:BMS)

27

Y

Brown-Forman Corp B

(NYSE:BF.B)

27

Y

CenturyLink Inc

(NYSE:CTL)

37

Y

Chubb Corp

(NYSE:CB)

45

Y

Cincinnati Financial Corp

(NASDAQ:CINF)

50

Y

Cintas Corp

(NASDAQ:CTAS)

27

Y

Clorox Co

(NYSE:CLX)

33

Y

Coca-Cola Co

(NYSE:KO)

48

N

Colgate-Palmolive Co

(NYSE:CL)

47

Y

Consolidated Edison Inc

(NYSE:ED)

36

Y

Dover Corp

(NYSE:DOV)

55

Y

Emerson Electric Co

(NYSE:EMR)

54

Y

Exxon Mobil Corp

(NYSE:XOM)

28

Y

Family Dollar Stores Inc

(NYSE:FDO)

34

N

Franklin Resources Inc

(NYSE:BEN)

29

N

Genuine Parts Co

(NYSE:GPC)

54

Y

Grainger, W.W. Inc

(NYSE:GWW)

39

N

Helmerich & Payne Inc

(NYSE:HP)

38

Y

Hormel Foods Corp

(NYSE:HRL)

45

N

Illinois Tool Works Inc

(NYSE:ITW)

47

Y

Johnson & Johnson

(NYSE:JNJ)

48

Y

Kimberly-Clark

(NYSE:KMB)

38

Y

Leggett & Platt

(NYSE:LEG)

39

Y

Lowe's Cos Inc

(NYSE:LOW)

48

Y

McCormick & Co

(NYSE:MKC)

25

Y

McDonald's Corp

(NYSE:MCD)

34

Y

McGraw-Hill Cos Inc

(MHP)

37

N

Medtronic Inc

(NYSE:MDT)

33

N

Nucor Corp

(NYSE:NUE)

37

N

Parker-Hannifin Corp

(NYSE:PH)

54

Y

PepsiCo Inc

(NYSE:PEP)

38

Y

Pitney Bowes Inc

(NYSE:PBI)

28

Y

PPG Industries Inc

(NYSE:PPG)

39

Y

Procter & Gamble

(NYSE:PG)

54

Y

Sherwin-Williams Co

(NYSE:SHW)

32

Y

Sigma-Aldrich Corp

(NASDAQ:SIAL)

34

Y

Stanley Black & Decker

(NYSE:SWK)

43

N

Sysco Corp

(NYSE:SYY)

41

Y

Target Corp

(NYSE:TGT)

43

Y

VF Corp

(NYSE:VFC)

38

Y

Walgreen Co

(NYSE:WAG)

35

Y

Wal-Mart Stores

(NYSE:WMT)

36

So, while the S&P has chosen to include nine companies in its Aristocrat Index (and ETF) that have streaks shorter than 25 years, it is also ignoring 11 companies in its own S&P 500 Index that do have streaks of 25 years or more. The question is: Why? A few of these omissions might be explainable.

For example, Altria spun off both its interest in Kraft Foods (KFT) and Philip Morris International (NYSE:PM), so its adjusted payout may appear to have been reduced (although not so when you properly apportion the payouts of the various pieces of the “old” Altria). And one could argue that Nucor's dividend declined after having paid several years of “extra” or “special” dividends (but did not reduce its “regular” dividend). But why don't they include AT&T, Colgate-Palmolive, Franklin Resources, Genuine Parts, Helmerich & Payne, Illinois Tool Works, Medtronic, Parker-Hannifin, or Sysco? Only the S&P can answer that question, but good luck getting an answer out of Mr. Standard or Mr. Poor.

Source: S&P Aristocrats Mystery Solved?