What Are The Dividend Achievers, Contenders, Aristocrats, Champions, and Kings?

Up to date on October eleventh, 2024

It is a visitor contribution by Kanwal Sarai from Merely Investing, up to date by Bob Ciura

Buyers can observe a number of completely different methods for shares. Some buyers observe momentum methods, buying and selling shares with excessive value beneficial properties. Different buyers observe a excessive development technique specializing in tech shares, like Apple (AAPL) and Amazon (AMZN).

One more sort of investor seeks earnings by shopping for and holding high-yield shares, like utilities and actual property funding trusts (REITs).

A fourth method is dividend development investing, specializing in shares that pay a rising dividend yearly. This technique is more and more standard, and the kind of shares are categorized into the Dividend Achievers, Contenders, Aristocrats, Champions, and Kings.

The Dividend Aristocrats are a bunch of 66 shares within the S&P 500 Index, which have elevated their dividends for 25+ consecutive years.

You possibly can obtain an Excel spreadsheet of all 66 Dividend Aristocrats (with metrics that matter similar to dividend yields and price-to-earnings ratios) by clicking the hyperlink beneath:

This text will focus on dividend development investing, and a number of other of the assorted lists of dividend development shares.

What’s Dividend Development Investing?

Dividend development investing is an method to purchasing and holding the inventory of corporations rising their dividend yearly.

Dividend development buyers wish to put money into undervalued shares paying a dividend as an alternative of overvalued shares that don’t. As well as, these buyers rationalize that dividends require actual money to pay shareholders and thus are an indicator of the businesses’ precise earnings and well being.

Moreover, an organization demonstrating the flexibility to lift the dividend yearly over time most likely has an excellent enterprise mannequin. Alternatively, an organization chopping or suspending its dividend is clearly struggling.

Dividend development shares are sorted into teams referred to as the Dividend Achievers, Contenders, Aristocrats, Champions, and Kings, however what precisely are they?

What are the Dividend Achievers, Contenders, Aristocrats, Champions, and Kings?

Dividend Achievers are corporations which have raised their dividends for ten years in a row or extra. Moreover the 10-year dividend development streak, corporations have to be listed on the New York Inventory Change (NYSE) or Nasdaq and have a three-month common day by day buying and selling quantity of $1 million.

At present, there are about 400 Dividend Achievers. Many corporations are from the Client, Industrials, Financials, and Utilities sectors. As well as, the group contains corporations like Microsoft (MSFT), and so forth.

The following class is the Dividend Contenders. They’re shares elevating the dividend for between 10 and 24 years. The checklist is just like the Dividend Achievers checklist, however since it’s capped at 24 years, the whole variety of corporations is smaller.

At present, there are round 340 Dividend Contenders. The sector with probably the most vital illustration is Monetary Companies, adopted by Industrials and Utilities. This group contains corporations like Residence Depot (HD), Huntington Ingalls Industries (HII), and lots of native and regional banks.

The Dividend Aristocrats are corporations which have raised their dividends for 25+ years and are part of the S&P 500 Index. As well as, they will need to have a minimal market capitalization of $3 billion and a $5+ million common day by day buying and selling quantity for the three months earlier than the rebalancing date.

On the finish of 2023, 68 corporations had been members of the Dividend Aristocrats. The quantity is comparatively small due to the stricter necessities. Sectors with probably the most vital illustration are Client Staples and Industrials.

Firms on this checklist are sometimes bigger, well-established corporations which can be market leaders. For instance, corporations like Worldwide Enterprise Machines (IBM), Colgate-Palmolive (CL), Coca-Cola (KO), and Consolidated Edison (ED) are on the checklist.

The Dividend Champions are just like the Dividend Aristocrats. Nonetheless, the one requirement is rising the dividend for 25 or extra years. Consequently, the variety of corporations on the checklist is bigger at ~150.

As well as, the checklist contains corporations which can be part of the Dividend Aristocrats and ones with a market capitalization of lower than $3 billion and aren’t a member of the S&P 500 Index.

The 2 sectors with probably the most illustration are Industrials and Monetary Companies. Smaller corporations on this checklist embody MGEE Vitality (MGEE), and Sonoco Merchandise (SON).

The final class is the Dividend Kings. To achieve this standing, an organization should improve the dividend for 50+ consecutive years. There is no such thing as a different requirement; nevertheless, the duty shouldn’t be a straightforward one.

At present, there are solely 53 corporations on the checklist. Examples of corporations on this checklist embody Federal Realty Belief (FRT), Emerson Electrical (EMR), Johnson & Johnson (JNJ), and Procter & Gamble (PG).

Dividend Aristocrat Spotlight: Brown & Brown (BRO)

Brown & Brown Inc. is a number one insurance coverage brokerage agency that gives danger administration options to each people and companies, with a give attention to property & casualty insurance coverage.

Brown & Brown posted second quarter earnings on July twenty third, 2024, and outcomes had been higher than anticipated on each the highest and backside traces. Adjusted earnings-per-share got here to 93 cents, which was a nickel forward of estimates.

Supply: Investor Presentation

Income was up 12.4% year-over-year to $1.18 billion, which was additionally $40 million forward of expectations.

Brown & Brown’s aggressive benefit comes from its willingness to execute small and frequent acquisitions. This growth-by-acquisition technique provides the corporate an everlasting alternative to proceed rising its enterprise for the foreseeable future.

Click on right here to obtain our most up-to-date Positive Evaluation report on BRO (preview of web page 1 of three proven beneath):

Dividend King Spotlight: SJW Group (SJW)

SJW Group is a water utility firm that produces, purchases, shops, purifies and distributes water to customers and companies within the Silicon Valley space of California, the realm north of San Antonio, Texas, Connecticut, and Maine.

SJW Group has a small actual property division that owns and develops properties for residential and warehouse prospects in California and Tennessee. The corporate generates about $670 million in annual revenues.

Supply: Investor Presentation

On July twenty fifth, 2024, SJW Group introduced second quarter outcomes for the interval ending June thirtieth, 2024. For the quarter, income grew 12.3% to $176.2 million, beating estimates by $10.2 million. Earnings-per-share of $0.66 in contrast favorably to earnings-per-share of $0.58 within the prior 12 months and was $0.08 greater than anticipated.

As with prior intervals, the development in income was largely because of SJW Group’s California enterprise, which benefited from greater water charges whereas a rise in prospects aided the Texas enterprise. Larger charges general added $13 million to outcomes for the quarter whereas greater buyer utilization added $3.8 million.

Click on right here to obtain our most up-to-date Positive Evaluation report on SJW (preview of web page 1 of three proven beneath):

Which shares ought to I put money into?

On the finish of the day crucial query for buyers is: Which shares ought to I put money into? The easy reply is: Put money into high quality dividend paying shares when they’re priced low (undervalued).

The Merely Investing on-line course teaches you precisely how one can determine when a inventory is a top quality inventory (and when it isn’t a top quality inventory), and when a inventory is undervalued (and overvalued).

A easy guidelines of 12 guidelines of investing lets you choose high quality shares when they’re undervalued, and simply filter by way of the checklist of dividend Achievers, Contenders, Aristocrats, Champions, and Kings.