By Todd Rosenbluth, CFRA
Once a company pays a dividend, there’s a strong likelihood it will continue to return cash to shareholders for years to come. However, it is rare for company to raise its dividend for 20 or even 25 consecutive years. When it happens, we think these companies deserve recognition. Perhaps joining a popular dividend ETF will suffice.
S&P Dow Jones indices reviews existing and potential constituents to its Aristocrats indices on an annual basis based on updated dividend history. On February 1, four stocks will be added to S&P 500 Dividend Aristocrats index. Let’s meet the newly crowned dividend royalty — two from the industrials sector and two from financials.
Within industrials, United Technologies (UTX), an aerospace & defense company, raised its quarterly dividend by 5% to $0.74/share in October. Meanwhile, Caterpillar (CAT), part of the construction materials & heavy truck sub-industry, hiked its quarterly dividend by 10% in April to $0.86/share.
Though property & casualty insurer Chubb (CB) raised its quarterly dividend in May by only 2.8% to $0.73/share, it was enough to extend the consecutive annual streak to 25 years. Meanwhile, shareholders in regional bank People’s United Financial (PBCT) experienced an even smaller 1.2% dividend increase in January 2018. Yet this to was enough to help the financial company achieve Aristocratic status.
ProShares S&P 500 Dividend Aristocrats Index ETF (NOBL), a $4 billion ETF, tracks this S&P 500 dividend index. As of January 25, Consumer Staples (23%) and Industrials (22%) were the two largest sectors with Financials (10%) the sixth largest. Kimberly Clark (KMB) and Procter & Gamble (PG) were among the larger consumer staples positions that earn above-average S&P Global Market Intelligence Quality Rankings, which measure the growth and quality of earnings and dividends over the past 10 years.
CFRA, which rates ETFs, based on a combination of holdings level analysis and fund traits has an Overweight rating on NOBL. The ETF charges a 0.35% expense ratio and trading more than 1 million shares on a daily basis with a tight penny bid/ask spread.
Todd Rosenbluth is Director of ETF & Mutual Fund Research at CFRA.
This article was originally published on MarketScope Advisor on January 28, 2019. Visit https://newpublic.cfraresearch.com/ to gain access.