what is a dividend aristocrat 
a dividend aristocrat is a company in the s p 500 index that not only consistently pays a dividend to shareholders but annually increases the size of its payout a company will be considered a dividend aristocrat if it raises its dividends consistently for at least the past 25 years some aficionados of dividend aristocrats rank them according to additional factors such as company size and liquidity for instance having a market capitalization in excess of 3 billion understanding the dividend aristocratcompanies that are able to maintain high dividend yields are relatively rare and their businesses are usually very stable they tend to have products that are recession proof allowing them to keep taking in profits and paying dividends even while other companies are struggling there are usually fewer than 100 dividend aristocrats at any given time in 2021 just 65 dividend aristocrats were listed among the standard poor s 500 they can be found in many sectors including health care retail oil and gas and construction startup companies and high flyers in technology rarely offer dividends at all their management teams prefer to reinvest any earnings back into the operations to help sustain higher than average growth some fledgling companies even run at a net loss and don t have the cash on hand to pay dividends large established companies with predictable profits are better dividend payers in general many do not enjoy regular robust growth or a constantly rising stock price these companies tend to issue regular dividends as an alternative way of rewarding their shareholders examples of dividend aristocratsanalysts have many ways to evaluate dividend aristocrats as investments they include the growth of the stock prices of companies over time their resilience to a downturn in the stock market and their expectations for future prosperity that means there is an ever changing hierarchy among dividend aristocrats forbes selected its top dividend aristocrats for 2021 based on its expectations of the companies total future returns note that these choices particularly exxon mobil were made prior to the 2021 collapse in oil prices sparked by the spread of the novel coronavirus 65 stocks meet the criteria required to be a dividend aristocrat in 2021 some examples include two ways to track the performance of these stocks include the s p dividend aristocrats index and the s p high yield dividend aristocrats index advantages and disadvantages of dividend aristocratsa company that pays out an ever increasing dividend is ideal for investors looking for stable income and being such a company is a positive signal that the firm is on sound financial footing remember however that a dividend is a portion of a firm s profits that it is paying to its owners shareholders in the form of cash any money that is paid out in a dividend is not reinvested in the business if a business is paying shareholders too high a percentage of its profits it may be a sign that management prefers not to reinvest in the company given a lack of growth opportunities therefore a dividend aristocrat may be squandering growth opportunities or not have any such opportunities to redirect profits moreover company management can use dividends to placate frustrated investors when the stock isn t appreciating that said if a dividend aristocrat is able to grow the payout it gives to shareholders on a regular basis it does imply some organic level of growth in order to fund those payments provides stable income for shareholders