 |
As many of you may already know, there is an index product put out by the same company that does the world famous S&P 500 that is focused exclusively on companies that have followed a managed-dividends policy of consistently increasing dividends every year for at least 25 years. It is called the S&P 500 Dividend Aristocrats a very elite list of companies and is one of the first places I go when I am looking for stocks to invest in. Every year the company updates the list by removing companies that did not raise their dividends and by adding companies that hit the magical 25 year mark.
In a recent press-release, S&P provided investors of the additions and deletions. To save you some time from downloading the pdf, here is what transpired:
Companies that Were Dropped from the Dividend Aristocrats List
First Horizon National (FHN)
Altria (MO)
SLM (SLM)
Companies that Were Added to the Dividend Aristocrats List
Aflac (AFL)
Air Products & Chemicals (ADP)
Exxon Mobil (XOM)
Integrys Energy (TEG)
Pitney Bowes (PBI)
A couple of very familiar names on the list. Exxon in particular is one that I am going to look at during an upcoming Dividend Stock Wednesday where I have a look at a dividend stocks to determine a buy price.
As I have said before on this blog, if you are looking for a good place to start some analysis, the S&P 500 Dividend Aristocrats is a great place to start. In addition, there are some index products that attempt to replicate the index that are an option as well if you are not into the individual stock thing.
Jeremy,
I acknowledge that Exxon is going to continue to prosper and increase their dividend for the next 10 years probably, but I can’t help wonder if you or your readers take social investing into consideration with companies such as XOM. What I mean is that Exxon is one of the larger members of the lobby to prevent the United States from undertaking an energy policy that would get us off of foreign oil. For instance, the GOP just voted down a bill today that would prevent further research development of alternative fuels such as wind and solar, while also removing the hefty tax incentives that arguably are no longer needed by companies such as XOM now that oil is at 90$ a barrel. So again, just curious to see if you take things like this into consideration when looking at a divi stock. Thanks, John.
It is interesting that XOM was not on the list previously. Just this morning on Squawk Box, they were talking about how demand for oil in China is going to grow exponentially. Only about 10 people in 1000 have a car in China compared to about 460 out of 1000 in the United States.
I have been looking at Aflac for quite some time, but have never purchased. They always seem to have consistent earnings and growth. Thanks for the great article.
Hi John,
Thank you for your comment. Before I respond, I need to say that I actually work for and oil and gas company so my response may be biased. I feel that the future of the energy industry is good as the resources are scarce and this should fare well for my stock options and employee stock purchase plan.
That being said, I do beleive that what you are speaking about is more political than anything. We do have a social responsibility to ensure that corporatations are not running things, but what makes this difficult is the political systems that acts for the companies and not for the people. That is just my view. I would like to hear what my readers have to say about it – folks, please have at it…
I have taken some social consideration into my stock selection – I never could bring myself to buy Altria who is/was in the tabacco business. For some reason I could not do it – I do not like smoking and the harmful effects it has on people. I guess the same could be said about the energy industry, but we do need energy to survive. We don’t need cigarettes. Again, the political systems who receive millions from tobacco companies are more to blame than anything…
Thanks for visiting and your insightful comment!
Exxon is an interesting on to look at. They’ve also been plowing money into share buybacks for quite some time now so they clearly have a focus on returning money to shareholders. The key there is that this has fueled EPS growth during a time where their net income has been growing at a pretty good clip too. Though, it seems the earnings performance has begun to slow down a bit as costs catch up to them.
I am surprised that MO was dropped from the list. The dividend payment did decrease, but that was because KFT was spun off.
Why do you call it “dividend investing” for US stocks when the “US dividends” are treated like regular interest incomes in Canadian income tax?
Hi xluu,
I am not sure exactly what your question is, but I think you are saying that in Canada it is not worth it to invest in US dividend paying stocks because of the tax treatment? I think that missed the point of dividend growth investing. As dividend investors, we are looking for stocks that consistently increase their dividends which increases our shareholder value greatly as time goes on. Just because the tax treatement is different does not mean it is not dividend investing in my opinion. If you could clarify your point I would love to hear from you.
TDG
Hello TDG,
I’ve always viewed “dividend investing” as dividend income through dividend-yielding stocks and any resulting capital appreciation (i.e. capital gain) is a bonus. If I understand correctly, you view “dividend investing” as an indirect path to capital appreciation. If that’s the case then I don’t see any difference between investing in US dividend-paying stocks and investing in some great Canadian income trusts that regularly increased their distributions. Both get the same Canadian tax treatments (before year 2011) but no one would call investing in income trusts “dividend investing”. Don’t get me wrong. I’m a big fan of dividend investing but I view it as a method of acquiring income through dividends. For 2006 an Ontarian couple with $60,000 of dividend income would have paid virtually no tax (except for the health premium) while the same amount in capital gain would yield quite a bit less after tax. Dividend incomes can be achieved with relatively lower risks than capital gains.
Great Canadian dividend-paying stocks have proven over the years to provide the similar dividend growth rates as (if not better than) US stocks. There are enough Canadian companies spanning various industries to give any small investor the required diversification. In my humble opinion, the objective of “dividend investing” should be dividend income (a primary goal) and not capital appreciation. Any capital appreciation should be considered secondary. I, therefore, don’t see the advantages of investing in US dividend-paying stocks unless the main objective is capital appreciation. If capital appreciation is the objective, then dividend yield is just one of many variables an investor would use to evaluate stocks and one might as well call it value investing (a redundant term since all investing is value investing). I do have US stocks in my porfolio and they’re ALL paying dividends. But my objective for US stocks is capital appreciations and yield, P/E, P/CF, P/BV, etc. are all important variables. By the way, you’ve a great blog.
Thanks! Ill have to take a closer look at the new adds.