No doubt you have read about Dividend Aristocrats in your passive income research. Simply put, they are dividend stocks that have continually paid and increased their dividends for 25 years or more. We add the gender-neutral title “Monarch” for those exalted organizations that have done the feat for 50 years or more.
Of the 113 Aristocrats (which includes Monarchs), we narrowed it down to just the top 11. We eliminated stocks that are not “Premier” status (top percentiles of their sector) and with certain negative results. We included top candidates from nearly all sectors (except energy and communications as they don’t typically meet our safety requirements.) You’ll recognize most of the names as to become and stay an Aristocrat gains a bit of fame, at least in the investing world.
Here are some statistics from our illustrious group:
- Total average annual return is 18.5% for the group (10 year period)
- Highest average annual return is 31.8% from (10 year period)
West Pharmaceutical Services (WST)
- Lowest average annual return is 10.2% from (10 year period)
Essex Property Trust Inc (ESS)
- All stocks in this list are “Premier” status, ie, in the top 30% of their sector (except Financial ~ top 20%)
- 10 year dividend growth rate is good at 10.2% per year (average)
- 10 year free cash flow growth rate is good at 11% and great at 15.4% on average for 5 years
- Safety factors: Average payout ratio is 50%, Beta 0.8, and debt-to-equity at 1.0
- The average price-to-earnings ratio is 41.0 and price-to-sales ration is 5.24, indicating that these reliable choices are more expensive – quality costs.
Personally, I’m interested in adding McCormick & Co Inc (MKC) to my portfolio because of it’s defensive nature, high reliability rating, high cash flow growth and low payout ratio. I am also interested in Badger Meter Inc (BMI) because it has stellar cash flow growth (which could change due to the pandemic). Essex Property Trust (ESS) is interesting for those seeking current dividend income for its relatively high yield of 3.7%.
Would love to hear your thoughts and which is right (or wrong!) for portfolio. Feedback welcome!