The Best 5 Dividend Aristocrats

The Best 5 Dividend Aristocrats

Investing surplus savings in company stocks is a regular exercise nowadays. Ever since the first public offering and issue of dividends, dividends have formed a major part of income return from stock investments. Companies that pay dividends are generally matured and seasoned companies that have enough cash flow to support the distribution of portions of profit to their shareholders.

 

Dividend aristocrats are generally companies that used be a part of the S&P 500 that have declared dividends increases consistently for the last 25 years. S&P Dow Jones Indices manages the list of Dividend aristocrats. Recently in mid 2012, S&P Dow Jones declared that instead of the conventional 25 years criteria for being a Dividend aristocrat, companies now only have to provide dividend increases consecutively for 20 years.

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The basic reason for considering the Dividend aristocrats to be a league apart is their loyalty and consideration towards their shareholders. Whether in times of great affluence or terrible misfortune, the company has always stood by its shareholders and provided them with whatever little increase in dividend they could afford at that point. Due to their continued service towards the shareholders they are revered as the royalty among dividend paying companies.

Most companies that are aristocrats follow few guidelines and have made significant reservations to make sure that their shareholders have always something to cheer about. Discussed below are some of the important points that a company keeps in consideration while implementing policies to make sure that the shareholders do not suffer:

  1. All stocks mandatorily need liability-adjusted cash flow yield to be better than the yield of a 10 year old U.S Treasury Note.
  2. The return on invested capital from each stock must be greater than 10%.
  3. The must have been an appreciation in the value of the stocks over the past 10 years.
  4. The company needs to have a five-year average tax rate greater than 25%.
  5. The quick ratio [(cash + marketable securities + receivables)/current liabilities] for the company must be greater than 1.

As per above criteria and other factors the following companies are supposed to be the best five Dividend aristocrat companies in the world currently.

  1. McGraw Hill Company is information provider for financial and commercial markets and educational services. It is a worldwide company renowned for its valuable contribution to the information services market.
  2. Leggett & Platt Inc. (LEG) is the second of the top 5 companies that forms part of the Dividends Aristocrats group. It is market leader in manufacturing and designing engineering components and products world wile
  3. V F Corporation (VF) is known for being a leader in designing and manufacturing apparels and footwear. Their products are highly popular and they offer exemplary service to its clients.
  4. Dover Corporation (DOV) is related with variety of business lines. It is known to manufacture and sell a wide range of products. It is also a big player in manufacture of consumer durables. DOV also provides various other related services.

C R Bard Inc. is a leading manufacturer, developer and designer of various life-saving technologies that can be used in the field of healthcare. C.R Bard mainly specializes in the field of vascular, urology, oncology and surgical specialty.

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