A New Take on the Aristocrats

02/17/2017 8:00 am EST


Harry Domash

Publisher, DividendDetective and Winning Investing

The S&P Dividend Aristocrats is a list of S&P 500 stocks that have increased their dividends for at least 25 consecutive years. Typically around 50 stocks make the list, which is updated at the beginning of each year, observes Harry Domash, editor of Dividend Detective.

Since its 2005 inception, the Aristocrats have produced more or less the same annual returns as the S&P 500. The major exception was 2008 when the Aristocrats only dropped 22% compared to the S&P’s 37% loss.

Dividend Detective (DD) has developed a strategy for isolating the seven stocks on each year’s Aristocrats’ list with the best 12- month return prospects.

Here’s how you would have fared holding “DD’s 7 Best Aristocrats” over the past five years compared to the full Aristocrats list and to the S&P 500. 

* In 2012, our 7 Best would have returned 17.5% versus 16.9% for all Aristocrats and 16% for the S&P 500. 

* In 2013, our 7 Best would have returned 38.9% versus 32.2% for all Aristocrats and 32.4% for the S&P 500. 

* In 2014, our 7 Best would have returned 20.7% versus 15.8% for all Aristocrats and 13.7% for the S&P 500. 

* In 2015, our 7 Best would have returned 3.0% versus 0.9% for all Aristocrats and 1.4% for the S&P 500.  In 2016, our 7 Best would have returned 21.1% versus 11.8% for all Aristocrats and 12.0% for the S&P 500.

The current “7 Best Aristocrats” list based on our hedge fund style quantitative screen are:

Aflac (AFL) — yielding 2.5%
Archer-Daniels Midland (ADM) — yielding 2.7%
Chevron (CVX) — yielding 3.8%
ExxonMobil (XOM) — yielding 3.6%
Genuine Parts (GPC) — yielding 2.7%
Johnson & Johnson (JNJ) — yielding 2.8%
T. Rowe Price (TROW) — yielding 3.2%

We will update the list monthly so that you could start at any time during the year. While we developed our  strategy with 12-month holds in mind, recent testing has found that you don’t have to hold that long to achieve good results.

For instance, had you rebalanced monthly in 2016, you would have achieved a 23.5% total return, slightly better than the 21.1% that resulted from holding for the entire year without rebalancing.

Keep in mind that in the stock market nothing works all of the time and a previously successful strategy won’t necessarily make money in the future.

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