The S&P 500 Dividend Aristocrats Index is designed to measure the performance of S&P 500 Index constituents that have consistently increased dividend payments every year for at least 25 years, explains Vaughan Scully of S&P Capital IQ in The Outlook.

The S&P 500 High Yield Dividend Aristocrat Index includes companies with 20 years of dividend increases. The index is equal-weighted, with constituents reweighted every quarter. Membership is reviewed each January.

In addition to 25 years of consecutive dividend increases, S&P 500 Dividend Aristocrats must also have a float-adjusted market capitalization of $3 billion and have a minimum of $5 million in daily trading value for the three months prior to rebalancing.

The Index has a minimum of 40 members, and no sector can account for more than 30% of the index.

Since 1926, dividends have contributed nearly a third of total equity returns, while capital gains have contributed two-thirds.

The S&P 500 Dividend Aristocrat index captures sustainable dividend income and capital appreciation potential, which are both key factors in investors' total return expectations.

Unlike indices that focus solely on high dividend yields, which typically hail from the financials and utilities sector, the S&P 500 Dividend Aristocrats are well-diversified across all sectors. The result is that the index portfolio has both, capital growth, and dividend income characteristics.

We highlight below, the 2014 S&P 500 Dividend Aristocrats that currently have a 4-STARS or 5-STARS ranking—our buy ratings—from S&P Capital IQ.

Abbott Laboratories (ABT)

AbbVie (ABBV)

Aflac (AFL)

C.R. Bard (BCR)

Brown-Forman (BF-B)

Cardinal Health (CAH)

Chevron (CVX)

Coca-Cola (KO)

Consolidated Edison (ED)

Dover (DOV)

Emerson Electric (EMR)

Franklin Resources (BEN)

W.W. Grainger (GWW)

Johnson & Johnson (JNJ)

Medtronic (MDT)

PepsiCo (PEP)

Procter & Gamble (PG)

Sysco (SYY)

T. Rowe Price (TROW)

VF Corp. (VFC)

Wal-Mart Stores (WMT)

Investors who would like to gain exposure to the Aristocrats may want to consider the ProShares S&P 500 Aristocrats ETF (NOBL), which tracks the S&P 500 Dividend Aristocrats index. The fund has attracted almost $12.5 billion in assets since launching in October, 2013. Also, State Street's SPDR S&P Dividend ETF (SDY) tracks the S&P High Yield Dividend Aristocrats index.

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