According to Standard & Poor's, 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 large-cap companies in this index must also have an average daily trading volume of at least $5 Million for the six months prior to the index reference date. The index is very prestigious and popular among dividend investors, especially during the market turmoil over the past few years.
Below we compiled a list of 10 S&P 500 Dividend Aristocrats that had the best 52-week returns. The average 52-week return of all constitutes of the index is about 10%, versus 4.68% for SPY in the same period. And the average 52-week return of the top 10 Dividend Aristocrats is 34.72%, beating the market by more than 30 percentage points.
W.W. Grainger, Inc.
Genuine Parts Company
Family Dollar Stores Inc.
The Chubb Corporation
The McGraw-Hill Companies, Inc.
Consolidated Edison Inc.
VF Corporation is the best performing stock among all Dividend Aristocrats. During the past 52 weeks, VFC returned 65.19%, outperforming the market by over 60 percentage points. It also has a dividend yield of 2.18%. VF is a global apparel company based in the United States. VF has been raising its quarterly dividend for nearly 40 consecutive years. In October last year, the company increased its quarterly dividend by 14.30% to 72 cents per share. VFC has a market cap of $15B and a P/E ratio of 21.4.
Consolidated Edison Inc has the highest dividend yield among the top 10 Dividend Aristocrats. It has a dividend yield of 4.44% and it returned 22.89% over the past year. Consolidated Edison is an electric utilities company. It reported annual net income of $1.1 billion for 2011, compared with $1.2 billion for 2010. It also announced that it raised its quarterly dividend by half a penny to 60.5 cents per share, which will be paid on March 15 to shareholders of record as of February 15. ED has a market cap of $17B and a P/E ratio of 16.47.
One mega-cap Dividend Aristocrat is McDonald's Corp. The fast food king posted better-than-expected fourth quarter earnings. It reported fourth-quarter net income of $1.38 billion, or $1.33 per share, up from $1.24 billion, or $1.16 per share, in the year-ago period. Its revenue also rose 10% from last year to $6.82 billion. The results beat the Wall Street analysts' expectation of a smaller profit of $1.30 per share on $6.81 billion revenue. MCD has a market cap of $103B and a P/E ratio of 19.79. It was up 38.65% over the past 52 weeks and has a dividend yield of 2.77%. As of September 30, 2011, there are 39 hedge funds that disclosed owning MCD in their 13F portfolios.
We think these 10 Dividend Aristocrats are attractive options for defensive investors who are looking for alternatives to 10-year Treasuries and some inflation protection. They have a history of increasing dividends regularly and delivering decent returns to investors. We encourage investors to focus on these Dividend Aristocrats and consider adding some of these stocks to their own portfolios.