Earnings season, which essentially ends next week, has been dominated by technology companies’ breathtaking results.
Beneath the surface, though, is a select group of outperformers that you might have missed. There are 20 companies in the S&P High-Yield Dividend Aristocrats Index, most of them large-caps, that have boosted sales per share by double digits over the past year.
When we cover the Dividend Aristocrats Indices, reader response tends to be tremendous. During a low-interest-rate environment, which we are still in now, investors crave high yields. But the two Dividend Aristocrat indices really highlight management teams that are capable and show respect to shareholders.
The S&P 500 Dividend Aristocrats Index
is maintained by S&P Dow Jones Indices and is made up of the 51 companies in the large-cap S&P 500
that have raised their dividends on common shares for at least 25 straight years. It makes no difference how high the dividend yield is. The point is that there is a correlation between consistently raising the payout and good long-term performance.
Here’s a comparison of total returns, with dividends reinvested, for the S&P 500 and the S&P 500 Dividend Aristocrats over the past 10 years:
The S&P 500 Dividends Aristocrats has returned 152%, compared with 98% for the broader S&P 500. That’s incredible outperformance for the Aristocrats.
One way invest in the entire index is the ProShares S&P 500 Dividend Aristocrats ETF
(Disclosure: I hold shares of this ETF.)
S&P Dow Jones Indices also maintains the S&P High-Yield Dividend Aristocrats Index
which consists of the 108 components of the S&P 1500 Composite Index that have raised their dividends on common shares for at least 20 consecutive years. The S&P 1500 Composite Index comprises the S&P 500, the S&P 400 Mid-Cap Index
and the S&P Small-Cap 600
Any S&P 500 Dividend Aristocrat is also a High-Yield Dividend Aristocrat.
The S&P High-Yield Dividend Aristocrats Index has outperformed the S&P Composite 1500 Index over the past 10 years, but by a narrower margin:
Then again, there are 25 S&P High-Yield Dividend Aristocrats with dividend yields above 3%. Among the S&P 500 Dividend Aristocrats, only 14 stocks yield more than that.
One way to invest in the entire High-Yield Dividend Aristocrats Index is the SPDR S&P Dividend ETF SDY
The best sales growers
To produce a list of companies that love to raise dividends and have had recent success, we began with the High-Yield Dividend Aristocrats and isolated the 20 that have increased their sales per share the most over the past 12 reported months (through May 12):
|Company||Ticker||Industry||Sales per share – past 12 months||Sales per share – previous 12-month period||Increase in sales per share||Dividend yield|
|RenaissanceRE Holdings Inc.||
|Property/ Casualty Insurance||$43.27||$36.42||19%||0.93%|
|Home Improvement Chains||$73.77||$63.54||16%||1.65%|
|Cardinal Health Inc.||
|New Jersey Resources Corp.||
|CDK Global Inc.||
|Misc. Commercial Services||$14.56||$13.01||12%||0.90%|
|National Fuel Gas Co.||
|Property/ Casualty Insurance||$68.49||$61.43||11%||2.02%|
|Federal Realty Investment Trust||
|Real Estate investment Trusts||$11.30||$10.17||11%||3.13%|
|Ross Stores Inc.||
|Apparel/ Footwear Retail||$32.60||$29.40||11%||1.01%|
|S&P Global Inc.||
|Financial Publishing/ Services||$21.90||$19.76||11%||1.20%|
|Life/ Health Insurance||$54.96||$49.71||11%||2.34%|
|A.O. Smith Corp.||
|Apparel/ Footwear Retail||$50.01||$45.35||10%||1.62%|
|Black Hills Corp.||
|SEI Investments Co.||
|Sources: S&P Dow Jones Indices; FactSet|
You can click on a company’s ticker symbol for more information, including news, estimates, ratings and performance charts.
We have looked at sales per share, rather than raw revenue, because the per-share numbers reflect any change in the net share count. If a company finances an acquisition by issuing a large amount of new shares, its sales per share will rise less than its revenue. Buybacks will lower the share count and raise sales per share.
Looking at the list, you can see many of the dividend yields are not particularly high. Then again, many compare well when you consider that 10-year U.S. Treasury notes
yield only about 2.3%, without offering the growth potential of dividend stocks.
But this really is a “growth list.”
Highest-yielding Dividend Aristocrats
Keeping in mind that the two Dividend Aristocrat Indices are really “growth indices,” as we measure their long-term performance against the broad indices, income seekers will ask which of these stocks have the highest yields.
Here are the highest-yielding stocks among the S&P High-Yield Dividend Aristocrats, along with their 12-month increases in sales per share:
|Company||Ticker||Industry||Dividend yield||Sales per share – past 12 months||Sales per share – previous 12-month period||Increase in sales per share|
|Tanger Factory Outlet Centers Inc.||
|Real Estate Investment Trusts||5.16%||$5.01||$4.69||6.7%|
|National Retail Properties Inc.||
|Real Estate Investment Trusts||4.82%||$3.71||$3.60||3.2%|
|Realty Income Corp.||
|Real Estate Investment Trusts||4.63%||$4.41||$4.36||1.3%|
|Mercury General Corp.||
|Property/ Casualty Insurance||4.58%||$57.98||$56.72||2.2%|
|People’s United Financial Inc.||
|International Business Machines Corp.||
|Information Technology Services||3.99%||$83.16||$82.84||0.4%|
|Old Republic International Corp.||
|Property/ Casualty Insurance||3.89%||$20.00||$19.78||1.1%|
|Publishing: Books/ Magazines||3.77%||$37.67||$36.15||4.2%|
|Exxon Mobil Corp.||
|Consolidated Edison Inc.||
|Emerson Electric Co.||
|Procter & Gamble Co.||
|Household/ Personal Care||3.20%||$23.50||$23.41||0.4%|
|T. Rowe Price Group||
|Federal Realty Investment Corp.||
|Real Estate Investment Trusts||3.13%||$11.30||$10.17||11.1%|
|Sources: S&P Dow Jones Indices; FactSet|
As always, if you see any companies on either list that interest you, the next step needs to be your own research, hopefully with the assistance of your broker or investment adviser.