A dividend aristocrat is a company that has been increasing their dividend for twenty-five years. These companies tend to be favored by long-term and dividend-growth investors because they offer a secure, reliable form of income. Given the recent economic turmoil surrounding Covid-19 we decided to take a look at all the dividend aristocrats and see how they fared before and after Covid-19.
Between February 19th and June 5th the S&P returned -8%, while dividend aristocrats fared only slightly better at -6%.
Only 22% or 14 of the 64 Aristocrats have turned positive since February 19th. The biggest leaders being Clorox (no surprise here) at 20%, and A.O. Smith Corporation at 18%.
The biggest losers in price have been Cincinnati Financial, Realty Income Corporation, and Aflac.
Asset prices have generally recovered from the tremendous drop they had in February, but whether or not they stay that way has yet to be seen. The quick gains to be had from the market bottoming out have largely vanished, but many securities on this list are now trading at bargain prices that make them more desirable than before the virus. A personal favorite of mine on this list is Realty Income Corporation. You can find a thorough analysis of it here.
Despite the massive round of dividend cuts I’m still a believer in dividend investing. Covid-19 has exposed the weak underlying financials of many companies, but those that maintain strong balance sheets will likely keep and even increase their dividends as competition clears out. If you want quick gains and to ride the market then dividend investing may not be for you. But if you are considering slow, steady, passive income that can build over decades, then it may be worth considering
See the link below for the list of dividend aristocrats with their yields and prices before and after the covid-19 drop.
Disclaimer the author is a shareholder of $O