How To Invest In The Dividend Aristocrats

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This one is another interesting and lucrative investment strategy. The so called dividend aristocrats is a group of stocks from the S&P 500 index, that have increased the dividends they pay to shareholders for at least 25 consecutive years. Sounds good, isn’t it? Not only these companies have paid dividends for a quarter of a century, but also they increased it every single year.

For the last 25 years, a portfolio containing all Dividend Aristocrats would have beaten the SP500 index big time. In you invested $1 000 in the index before 25 years you would have made around $7 990 in 2014. If you invested in The Dividend Aristocrats stocks the same amount, you would have made nearly twice – around $14 494 by year 2014. You can see how both of these investment scenarios would have developed on the following chart:

 

The chart shows the growth of The Dividend Aristocrats compared to the growth of SP500 index for the last 25 years. Source: <a href="http://nasdaq.com

The chart shows the growth of The Dividend Aristocrats compared to the growth of SP500 index for the last 25 years. Source:

 

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How To Invest In the Dividend Aristocrats?

Well, we have a cool investment strategy, now comes the question how we can put it into action. How can one invest in the Dividend Aristocrats? Well, this turns out to be not such a trivial thing. The list of all of the stocks contained 52 companies in 2009, then 42 companies in 2010 and 54 companies in 2014 (see all current companies at the full aristocrats list below ). What I am trying to say is that the list constantly changes and maintaining a portfolio of all the stock that are in the list at every point of time might be not that easy and sometimes expensive. However, here are

3 ways to invest in the Dividend Aristocrats

1. Invest in Dividend Aristocrats ETF

There are ETF funds that always maintain a portfolio of all Dividend Aristocrats, most of them track the S&P 500 Dividend Aristocrats Index, introduced in 1989. You can invest in such a fund and leave all the work of managing the portfolio to the professionals. This might be the best option for people who have no idea of how the stock market works or how to buy shares. ETFs also have some advantages like low maintenance fees and tax benefits, so you should really consider this option. Such funds are:

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SPDR S&P Dividend (SDY)

The ProShares S&P 500® Dividend Aristocrats ETF (NOBL) (0.78% expense ratio)