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The S&P 500 Dividend Aristocrats index measures the performance of companies which have increased their dividends for at least 25 consecutive years. This index beat the S&P 500 index over the past 1, 3, 5 and 7 years. The table below shows the recent performances of S&P 500 Dividend Aristocrats and S&P 500 indices.

Table Date: December 31, 2010

S&P 500 Dividend Aristocrats

S&P 500

Returns

1 Month

5.49%

6.68%

3 Month

6.98%

10.76%

YTD

19.35%

15.06%

Annualized
Returns

1 Year

19.35%

15.06%

3 Years

5.67%

-2.86%

5 Years

6.27%

2.29%

7 Years

7.16%

3.85%

Dividend Yield Annualized

2.82%

1.81%

Source: www.standardandpoors.com

During the last 12 months the companies in S&P 500 Dividend Aristocrats index have gained 17.24%, vs. 14.44% gain for the SPY. Average pay-out ratio of those stocks is 45% and the average dividend yield is 2.66%. Here is how the 42 stocks of S&P 500 Dividend Aristocrats index performed this year:

No:

Stock

Ticker

Pay-out ratio

Divident Yield

Return
Since Mar 25,2010

1

3M Co

MMM

37%

2.30%

17.26%

2

AFLAC Inc

AFL

23%

2.11%

2.04%

3

Abbott Laboratories

ABT

58%

3.66%

-6.89%

4

Air Products & Chemicals Inc

APD

41%

2.18%

25.00%

5

Archer-Daniels-Midland Co

ADM

20%

1.69%

30.22%

6

Automatic Data Processing

ADP

58%

2.78%

18.22%

7

Bard, C.R. Inc

BCR

13%

0.73%

14.43%

8

Becton, Dickinson & Co

BDX

27%

2.00%

0.94%

9

Bemis Co Inc

BMS

50%

2.91%

12.96%

10

Brown-Forman Corp B

BF.B

68%

1.84%

19.69%

11

CenturyLink Inc

CTL

93%

7.13%

25.55%

12

Chubb Corp

CB

22%

2.50%

18.47%

13

Cincinnati Financial Corp

CINF

69%

4.92%

18.52%

14

Cintas Corp

CTAS

66%

3.28%

6.53%

15

Clorox Co

CLX

52%

3.07%

11.62%

16

Coca-Cola Co

KO

35%

2.77%

21.64%

17

Consolidated Edison Inc

ED

69%

4.78%

19.74%

18

Dover Corp

DOV

29%

1.66%

44.34%

19

Ecolab Inc

ECL

29%

1.33%

16.77%

20

Emerson Electric Co

EMR

46%

2.36%

19.42%

21

Exxon Mobil Corp

XOM

28%

2.13%

27.99%

22

Family Dollar Stores Inc

FDO

22%

1.24%

46.34%

23

Grainger, W.W. Inc

GWW

30%

1.59%

27.08%

24

Hormel Foods Corp

HRL

28%

1.61%

34.97%

25

Johnson & Johnson

JNJ

44%

3.66%

-5.22%

26

Kimberly-Clark

KMB

59%

4.11%

7.96%

27

Leggett & Platt

LEG

92%

4.52%

15.00%

28

Lowe's Cos Inc

LOW

30%

1.54%

14.19%

29

McCormick & Co

MKC

38%

2.15%

32.95%

30

McDonald's Corp

MCD

49%

3.10%

15.61%

31

McGraw-Hill Cos Inc

MHP

35%

2.48%

11.22%

32

PPG Industries Inc

PPG

47%

2.47%

41.12%

33

PepsiCo Inc

PEP

48%

2.99%

-0.57%

34

Pitney Bowes Inc

PBI

104%

5.95%

7.60%

35

Procter & Gamble

PG

51%

3.15%

-0.92%

36

Sherwin-Williams Co

SHW

34%

1.73%

28.47%

37

Sigma-Aldrich Corp

SIAL

21%

1.04%

21.02%

38

Stanley Black & Decker

SWK

102%

1.87%

34.15%

39

Target Corp

TGT

21%

1.82%

-3.67%

40

VF Corp

VFC

47%

2.59%

23.36%

41

Wal-Mart Stores

WMT

27%

2.42%

-3.13%

42

Walgreen Co

WAG

28%

1.66%

12.09%

Average Performance

45.00%

2.66%

17.24%

SPY

14.44%

FDO has had the best performance in this index for the last 12 months. Jim Simons’ Medallion Fund and Stephen Mandel’s Lone Pine Capital are among the investors of FDO. FDO has gained 46.34% in the last 12 months, beating the SPY by a large margin. The worst performing stock in this list was ABT, losing 6.87% since the end of March 2010. Jim Simons has $160 million invested in ABT. ABT is also one of three top picks of Smead Value Fund’s Bill Smead.

Our research has shown that investors were able to beat the market by investing in hgh dividend paying stocks. These stocks are also less risky, i.e.decline less in down markets, compared to other stocks in the S&P 500 index. We believe investors can form a well diversified portfolio by buying these 42 names and manage to perform better than ordinary index funds over the long term.


Source: Beat the Market by Investing in S&P 500 Dividend Aristocrats