common stocks make up the s&p 500.
what types of stocks make up the s&p 500?
common
the s&p 500 dividend aristocrat index was launched by standard and poors in may 2005, and has historically outperformed the s&p 500 index with lower volatility over longer investment time frames. for example, over the past 10 years through the period ending june 30, 2019, the s&p 500 dividend aristocrat index has returned 16.28% on an average annual basis, compared to the s&p 500 index which has returned only 14.70% annually during that same period. the risk factor commonly called the standard deviation of the s&p 500 during this same 10 year period was 12.73% while the dividend aristocrat risk factor or standard deviation was 11.66% or 8.41% lower than the s&p 500. standard deviation measures investment risk as a range in percentage terms within a selected probability called in statistical terms a confidence level. the investment return would then fall within a range that is plus or minus around the mean investment return and would be typically within a bell shaped curve. the higher the standard deviation or the wider the plus and minus range of investment returns combined from that mean investment return, the greater the risk of the investment since it has the potential to be farther away from the projected mean return.
s&p 500 dividend aristocrats
to be eligible for the s&p 500 dividend aristocrat index, a stock must have increased their dividend payouts for a minimum of 25 consecutive years or more, must currently be part of the s&p 500 index and must have a minimum market capitalization of $3 billion. a committee at s&p global makes the final decision on which companies are included in the s&p 500 index and this then allows for eligibility for inclusion into the dividend aristocrat index. should a company reduce their dividend or be dropped from the s&p 500 index, the holding is automatically dropped from the dividend aristocrat list as well. the s&p 500 dividend aristocrat index has historically consisted of approximately 50 large cap companies with most of the stocks in this index rating b plus or higher on the quality scale. what stands out immediately upon review of the dividend aristocrat index is that unlike the s&p 500 index, there is a relatively small amount of technology holdings in the s&p 500 dividend aristocrat index.
s&p 500 dividend aristocrats