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Avi Morris became interested in stocks while in high school when he started an investment club. It made him a few bucks and his interest in stocks continued. Over the years, Avi earned a portfolio between savings & reinvested gains/dividends. At the start of November 2007, Avi started his... More
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  • S&P 500 Dividend Aristocrats provide good investment opportunities 0 comments
    Jul 15, 2009 10:20 AM | about stocks: BAC, PFE, GE, MAS, ABT, ADM, ADP, AFL, APD, AVY, BCR, BDX, BMS, CB, CINF, CLX, CTL, DOV, ED, EMR, FDO, GCI, GWW, JCI, JNJ, KMB, KO, LEG, LLY, LM, LOW, MCD, MHP, MMM, MTB, PBI, PEP, PG, PPG, ROH, SHW, SIAL, STR, SVU, SWK, TEG, TGT, VFC, WAG, WMT, XOM

    Standard & Poor's Dividend Aristocrats are the elite dividend payers in the S&P 500.  To be included, each company is required to have a minimum track record of 25 consecutive years of higher dividends.  But this group has been shaken after the market meltdown.  Seven banks in the group have been or will be dropped from the group after their dividend cuts.  The most embarrassing was Bank of America (BAC), Dow stock, 2 years ago bragged about their track record of growth (including dividends) especially over the previous 30 years.  At the beginning of the credit crisis, they raised the dividend to a $2.56 annual rate.  Just a few months later, they must have regretted that decision.  Now they only pay a token dividend, rejoining this group is a minimum of 25 years away.  Early this year, 3 prominent members of the group, Pfizer (PFE), General Electric (GE) and Masco (MAS), cut their dividends which will take them off the list by December.

    The S&P group has been reduced from about 60, to 51.  By my calculations, at least 3 will be removed by year end.  The number of new members must be small since these companies already need streaks of 23 or 24 years to be added to the group in the next year or two.

    However their fundamentals remain.  These are Warren Buffet's kind of stocks with, Coca Cola (KO), being his largest single investment.  Major ones which have already increased dividends this year include Dow stocks: 3M (MMM), Coca Cola (KO), Johnson & Johnson (JNJ), McDonald's (MCD), Procter & Gamble (PG) and Wal-Mart (WMT).  The remaining Dividend Aristocrats have generally grown stronger on a relative basis, especially those which have already increased dividends this year.

    Below is the list (prepared by Standard & Poor's in March 2009) that I adjusted by deleting companies already announcing dividend cuts.  In addition, Cincinnati Financial Corp (CINF) and M&T Bank Corp (MTB) each need a dividend increase by year's end to remain on the list.  Based on estimates for 2009 EPS, each one should be considered "iffy" regarding another dividend increase.  If there is no increase, that company will be dropped from the list.  The remainder of the Dividend Aristocrat list (shown below) can be used for investment ideas.  These companies have survived (and to some degree thrived) during the worst economic recession in 75 years.  Dividends and dividend increases are important for successful investing.  Data from Standard & Poor's shows that over the long term, 1/3 of gains come from dividends and 2/3 from growth.  Yields from dividends provide significant help in achieving excellent rates of return for the very smart investor.

     
    S&P Dividend Aristocrats         
     
    Company                             Ticker      
    Abbott Laboratories               ABT      
    Archer-Daniels-Midland Co    ADM      
    Automatic Data Processing    ADP      
    AFLAC Inc                              AFL      
    Air Products & Chemicals Inc  APD      
    Avery Dennison Corp             AVY      
    Bard, C.R. Inc                        BCR      
    Becton, Dickinson & Co         BDX      
    Bemis Co Inc                         BMS      
    Chubb Corp                          CB      
    Cincinnati Financial Corp      CINF      
    Clorox Co                              CLX      
    Centurytel Inc                        CTL      
    Dover Corp                           DOV      
    Consolidated Edison Inc       ED     
    Emerson Electric Co             EMR      
    Family Dollar Stores Inc        FDO      
    Gannett Co Inc                     GCI      
    Grainger, W.W. Inc               GWW      
    Johnson Controls Inc            JCI      
    Johnson & Johnson              JNJ      
    Kimberly-Clark                      KMB      
    Coca-Cola Co                       KO      
    Leggett & Platt                      LEG      
    Lilly, Eli & Co                         LLY      
    Legg Mason Inc                     LM      
    Lowe's Cos Inc                      LOW      
    McDonald's Corp                  MCD      
    McGraw-Hill Cos Inc              MHP      
    3M Co                                   MMM      
    M&T Bank Corp                    MTB
    Pitney Bowes Inc                   PBI      
    PepsiCo Inc                          PEP      
    Procter & Gamble                 PG      
    PPG Industries Inc                PPG      
    Rohm & Haas Co                  ROH      
    Sherwin-Williams Co            SHW      
    Sigma-Aldrich Corp             SIAL        
    Questar Corp                      STR      
    Supervalu Inc                      SVU      
    Stanley Works                     SWK      
    Integrys Energy Group Inc  TEG      
    Target Corp                        TGT      
    VF Corp                              VFC      
    Walgreen Co                      WAG      
    Wal-Mart Stores                 WMT      
    Exxon Mobil Corp               XOM     


    Disclosure:  I own KO, LLY & VFC:

    Themes: S P 500, dividends Stocks: BAC, PFE, GE, MAS, ABT, ADM, ADP, AFL, APD, AVY, BCR, BDX, BMS, CB, CINF, CLX, CTL, DOV, ED, EMR, FDO, GCI, GWW, JCI, JNJ, KMB, KO, LEG, LLY, LM, LOW, MCD, MHP, MMM, MTB, PBI, PEP, PG, PPG, ROH, SHW, SIAL, STR, SVU, SWK, TEG, TGT, VFC, WAG, WMT, XOM
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