Summary of Dividend Aristocrat ETFs

In this post I will summarize nine dividend aristocrat ETFs, as it is time consuming to first search the webb for these funds and then check each individual ETF page to compare the funds. This post aims to give you a summary with most important details about every ETF so that you don not have to spend your time searching all individually. I will start to present what a dividend aristicrat is, discuss why it could bring value, if it is better than an index fund, should you do it yourselfe or use a ETF and finalize with a summary of ETFs I found.

A dividend aristocrat is a company who has paid a consecutive increasing dividend for 25 years or more (Investopedia definition). This means if you invested in the company back in the days, then you most likely enjoy a solid dividend return every year and it is also growing on a yearly basis. On top of that ypu have stock appreciation, meaning the stock price has grown.

Why buy a dividend aristocrat?

The ability to increaase the dividend every year for a long period means the business is either growing or able to increase its prices. A good company which business has a moat, strong brand at a good price can be seen as a value opportunity and these companies are usually dividend aristocrats as well. We all know these companies, we know their brands and we usually consume their products on a daily basis (not all of them, obviously). Genuine Parts, Coca Cola and P&G are example of US Dividend Aristocrats. These solid and partially boring companies can contribute with good cash flow to a investment portfolio, increasing dividend usually is reflected in higher stock prices in the long run and that means you get more for the money you allocated to the investment. 

For example a dividend aristocrat held by Warren Buffett is Coca Cola, one of his favourite companies, a position he has held for a long time. Mr Buffett has said many times that Coca Cola can raise its price a little every year wihtout it having a major impact on the consumption. It is also a company associated with joy and happiness which is something I personally like. 

A short example of short-term dividend aristocrat investing. If you bought one share of Genuine Parts on 9th of January 2013, you would have received $20,004 in dividends and have a market value of $98,37 the 30th November 2020. A proper return of 80%, 30% coming from dividends and almost 50% from the price increase. If you compare the return to S&P 500 index then you might be surprised that Genuine Parts has returned less, the S&P 500 index is up about 188% compared to 180% for Genuine Partns (including dividends). What needs to be considred is if dividneds are what you want or do you want more growth (price increase) than cash flow. I like cash flow and that is why I like to hold dividend paying stocks for the long run and only small amounts in indexes.

If you like to find good excel sheets with dividends aristicrats then I recommend the following bloggers.

US stocks, Canadian stocks created and maintained by DGI&R

European stocks created and maintained by Christophe Soulet

 

Will Dividend Aristocrats be a better investment then S&P 500 index? 

Depends on the investment horizon, at least looking at S&P 500 Dividend Aristocrats (ticker SPDAUDT) you would follow the index very closely as you can see in the graph (very short comparison period here). This is for a short period considering how long some of the aristocrats have been increasing their dividends. We also have S&P 500 companies who do not pay a dividend (for example Amazon, Google and Facebook), yet in the future might start paying dividends. Once they achieve the recognition of Dividend Aristocrat the company will be added to the index and Dividend Aristocrat funds or ETFs at some point. 

A mix of index and dividend aristocrats could be a option as it diversifies the investments, note that the index fund or EFT includes the same companies as the Dividend Aristocrats fund or ETF. Why would both be a good mix? You have the Dividend Aristocrats in the S&P 500 Index...

S&P 500 index Top 10 companies per weight represent 28,1% of the index, meaning the biggest companies have a huge impact on the index as per Nov 2, 2020 (Investopedia). Johnson&Johnson and Procter&Gamble are in top 10 of the index as well as Dividend Aristocrats yet their weight of S&P 500 index is 2,6% which is small. A combination is good to reduce any risk of large exposure to a few companies while still having the benefit of enjoying development of growing companies such as Amazon, Google and Facebook. Also in the index fund you get Berkshire Hathaway which has never paid a dividend yet owns and amanges many good companies.

Lately S&P 500 index has outperformed Dividend Aristocrats (based on NOBLs performance) as tech companies have increased a lot in value while most other companies are still lagging in value. As you can see from the graph below from time to time dividend aristocrats peforme better than the general index even thought for the comparison period 9 October 2013 to 30 November 2020 the S&P 500 index has gained 205 % while ProShares S&P500 Dividend Aristocrat ETF has gained 198%.

How to invest in Dividend Aristocrats?

There is two ways to do it, one easy and one that takes time and effort.

1. Invest in individual Dividend Aristocrat stocks   

Creating an generic version on your own were you determine which companies, weights of portfolio etc. You are the master here. it will take some time to do it and is time consuming as you have to follow the companies. If a new company enters the aristocrat section then you have to find it first and ensure you also invest in it given that you want to replicate funds.   

2. Buy an Dividend Aristocrat ETF

The easy way to invest in dividend aristocrats is to buy a fund or ETF that focuses only on dividend aristocrats. Here are some examples of ETFs, yet all are not true dividend aristocrat ETFs as the companies do not fulfill requirements (note, all of them might not be available in your contry or via service supplier). There is most likely more ETFs which are focused on Dividend Aristocrats, at least I have tried to gather as many as I found below. Please reach out if there is any fund missing and I can add it to the list.

US Dividend Aristocrats ETFs

ProShares S&P 500 Dividend Aristocrats ETF (NOBL)

Expense ratio: 0,35%

Distribution. Quaterly 

Invests in S&P 500 companies with consecutively increasing dividend for at least 25 years.

SPDR S&P U.S. Dividend Aristocrats UCITS ETF (Dist) (INSPYDE)

Expense ratio: 0,35%

Distribution: Quaterly

Invests in S&P Composite 1500 index companies which have increased their annual dividend for 20 cnsecutive years.

ProShares S&P MidCap 400 Dividend Aristocrats (REGL)

Expense ratio: 0,41%

Distribution: Quaterly

Invests in S&P MidCap companies with consecutively increasing dividends for at least 15 years. 

Cboe Vest S&P 500 Dividend Aristocrats Target Income ETF (KNG)

Expense ratio: 0,75%

Distribution: Quaterly 

Invests in S&P 500 Dividend Aristoctats Index and Dow Jones U.S. Select Dividend Index companies with an interesting flavour, please see their description via link in ticker. 

European Dividend Aristocrat ETFs

SPDR S&P Euro Dividend Aristocrats UCITS ETF (Dist) (INSPYWE)

Expense ratio: 0,30%

Distribution: Semi-annual

Invests in 40 highest dividend yielding Eurozone companies.

ProShares MSCI Europe Dividend Growers ETF (EUDV)

Expense ratio: 0,56%

Distribution: Quarterly

Invests in MSCI Europe Index companies with longest track record of consistent dividend growth.  

SPDR S&P UK Dividend Aristocrats UCITS ETF  (Dist) (INSPYGE)

Expense ratio: 0,30%

Distribution: Semi-annual

Invests in 40 highest dividend yielding UK companies within S&P Europea Broad Market Index.

Asian Dividend Aristocrat ETFs

SPDR S&P Pan Asia Dividend Aristocrats UCITS ETF (Dist) (INZPRAE)

Expense ratio: 0,55%

Distribution: Semi-annual

Invests in companies which have consecutively increased their dividends for 7 years or more within the S&P Pan Asian Broad Market Index (BMI).

Global Dividend Aristocrat ETFs

SPDR S&P Global Dividend Aristocrats UCITS ETF (Dist) (INZPRGE)

Expense ratio: 0,45%

Distribution: Quaterly

Invests in companies with 10 years consecutively increasing dividens within S&P Global BMI.

Hope you enjoy the reading and found the summary valuable as it did open up my eyes on how many differnet ETFs there are and that there is for every market and a global one as well.

Disclaimer:

This is not an investment advice nor should it be considered in any way as advice or suggestions. Information given is based on current data available and might change in the future, therfore it is important for tha treader to check the data before making any decision or conclusion.