S&P Dividend Aristocrats

Portfolio income has become more important than ordinarily after one of the worst stock market declines since the depression. These difficult times may require significant base building before markets resume their upward climb. The S&P Dividend Aristocrat list of companies (currently 59) from the S&P 500 have demonstrated dividend payments that have withstood the test of time. To be included, each company has to show a track record of at least 25 years of consecutive higher dividend payments. Many have track records of 30-40 years, if not more.

Prominent members include: 3M (MMM), Coca Cola (KO), Exxon-Mobil (XOM - added last year), Johnson & Johnson (JNJ), Kimberly-Clark (KMB), Lowe's (LOW), McDonald's (MCD), Procter & Gamble (PG), Target (TGT), Wal-Mart (WMT) & Walgreen (WAG). The best is Stanley Works (SWK) which has paid a cash dividend for 132 consecutive years, increasing the dividend in each of the last 41 years. By way of contrast, widely know companies NOT on the list include: Chevron (CVX), IBM (IBM), Caterpillar (CAT), DuPont (DD), American Express (AXP) & Boeing (BA).

While long term track records are excellent guides for investment, care is always needed before selecting one. ConAgra (CAG) reduced the dividend a couple of years ago (although the stock has held up well following the dividend cut), taking it off the list. Banks deserve special mention. Of the 7 banks in this group at the start of 2005, only 3 remain: Bank of America (BAC), State Street (STT) & US Bancorp (USB). With the yield at Bank of America near 8½%, doubts are included in its evaluation. At the late July directors meeting, the dividend was not increased (traditional time for increases as was the case last year). Two AAA companies, Pfizer & General Electric, have had a tiny bit of doubt included in their yields & should be watched more carefully going forward. Many others have excellent prospects & should be given careful consideration for investment at a time when current income takes on increasing importance.

Here are 2 fact pages on the group, such information is difficult to get as S&P does not release much. Good luck checking out these companies.