is a positive signal indicating strong financials
dividends may be paid in lieu of growth opportunitiesdividend stocks may produce lesser capital gainsdividend payments are taxable eventsdividend aristocrats vs dividend kingssimilar to the dividend aristocrats dividend kings are companies that are known for paying out dividends consistently over time while a dividend aristocrat must be a member of the s p 500 and have an increasing dividend payout over 25 years or more to qualify as a dividend king a firm must only meet one hurdle paying an increasing dividend consistently for at least 50 years some dividend kings will also be dividend aristocrats and not all aristocrats will be dividend kings for instance they have not been around for 50 years or are not in the s p 500 it is less common for companies to consistently increase their dividends for over half a century so the number of dividend kings tends to be fewer than their aristocrat cousins dividend king the tootsie roll co tr has increased its annual cash dividend for 54 consecutive years and has paid continuous quarterly dividends for even longer identifying other quality dividend payersin general companies have dividend policies that fall into three categories a stable dividend policy a constant dividend policy or a residual dividend policy dividend aristocrat faqsall companies that are dividend aristocrats are members of the s p 500 and so one can identify those stocks and construct a dividend focused portfolio in 2021 there were 65 such stocks which can be found by searching the internet as several financial sites maintain up to date lists of the dividend aristocrats like the ones offered by dogs of the dow or sure dividend the weight given to dividend stocks will depend on several factors including your risk tolerance time horizon need for current income and tax situation because dividend aristocrats tend to be large mature companies with fewer growth prospects they can be less volatile but also carry lower expected returns retired individuals may especially benefit from the relatively lower risk and additional income that these stocks provide this will depend on the time period examined as of 2021 the dividend aristocrats index has performed almost identically to the broader market over the last decade with a 14 3 total annual return for the dividend aristocrats versus 14 2 for the s p 500 index however on a risk adjusted basis the dividend aristocrats have exhibited somewhat lower volatility than the broader market since these companies are mature and have weathered economic downturns before increasing dividends during recessions no less it can make sense to seek these stocks out as safe havens while growth stocks flounder 