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When it comes to dividend investing, I’m a believer that one has to practice diversification and invest in all eleven sectors.
It’s what financial analysts and investors tend to talk about often and write about and it’s something I’ve taken to heart. And by doing that, you play offense and defense no matter if a few sectors go down, other sectors go up. So, you need that fine balance in your portfolio.
The sectors are:
- Communication Services
- Consumer Discretionary
- Consumer Staples
- Energy
- Financials
- Health Care
- Industrials
- Materials
- Real Estate
- Technology
- Utilities
And I set a goal to pick and select stocks in each sector that I believe will have consistent performance but also increase their dividends overtime.
But how to pick which stocks to invest in for each sector that pay consistent dividends? I look to investing in dividend paying stocks that are part of a distinct group known as Dividend Kings and the Dividend Aristocrats.
The S&P 500 Dividend Aristocrat Index was launched by Standard and Poors in May 2005.
To classify as a Dividend Aristocrat, the stocks must be members of the S&P 500 and have increased their dividends for at least 25 years. They also must have a market cap of $3 billion, average at least $5 million in daily share trading value and the minimum number of constituents more than 30% of the index weight.
But the elite group within the Dividend Aristocrat Index are known as Dividend Kings. The primary difference is that their dividends have been increased for 50 years in a row and have the longevity, no matter if there is a stock market crash or a pandemic, these companies continued to increase their dividends.
This is important to know because you’ll notice that not many companies can do this. In 2020, once the pandemic hit, companies lowered or eliminated their dividends. But for companies who are part of either class, increasing their dividend and being part of the elite is attractive to investors who choose these companies and will invest with them for the long run through retirement or to invest in with hopes they can retire early and live off dividends.
As of April 2021, there are only 33 companies that have grown their dividend for 50 years in a row and joined the elite class to become Dividend Kings:
*NOTE: I have revised this list going through various lists mentioned on other financial sites but noticed they are quite different. In the end, I found the most trustworthy of Dividend Kings listings would be dividendgrowthinvestor’s list.
| Company Name | Symbol | Sector | Years Dividend Increases |
| ABM Industries Inc. | ABM | Industrials | 53 |
| American States Water | AWR | Utilities | 66 |
| Black Hills Corp. | BKH | Utilities | 50 |
| Commerce Bancshares | CBSH | Financials | 52 |
| Cincinnati Financial | CINF | Financials | 60 |
| Colgate-Palmolive Co. | CL | Consumer Staples | 57 |
| California Water Service | CWT | Utilities | 53 |
| Dover Corp. | DOV | Industrials | 65 |
| Emerson Electric | EMR | Industrials | 64 |
| Farmers & Merchants Bancorp | FMCB | Financials | 58 |
| Federal Realty Inv. Trust | FRT | Real Estate | 53 |
| H.B. Fuller Company | FUL | Materials | 51 |
| Genuine Parts Co. | GPC | Consumer Discretionary | 64 |
| Hormel Foods Corp. | HRL | Consumer Staples | 54 |
| Johnson & Johnson | JNJ | Health Care | 58 |
| Coca-Cola Company | KO | Consumer Staples | 58 |
| Lancaster Colony Corp. | LANC | Consumer Staples | 58 |
| Lowe’s Companies | LOW | Consumer Discretionary | 58 |
| 3M Company | MMM | Industrials | 62 |
| Altria Group Inc. | MO | Consumer Staples | 51 |
| MSA Safety Inc. | MSA | Industrials | 50 |
| Nordson Corp. | NDSN | Industrials | 57 |
| Northwest Natural Gas | NWN | Utilities | 65 |
| Procter & Gamble Co. | PG | Consumer Staples | 64 |
| Parker-Hannifin Corp. | PH | Industrials | 63 |
| Stepan Company | SCL | Materials | 53 |
| SJW Corp. | SJW | Utilities | 53 |
| Stanley Black & Decker | SWK | Industrials | 53 |
| Tootsie Roll Industries | TR | Consumer Staples | 52 |
And in 2021, the following companies are eligible to become Dividend Kings:
For Dividend Aristocrats, there are 65 stocks that make the list and 33 have become Dividend Kings. Joining the list of Aristocrats were International Business Machines (IBM), NextEra Energy and West Pharmaceutical Services.
Here is a list of Dividend Aristocrats (those who are not on the Dividend Kings List, * are companies added to S&P 500 and are eligible for Dividend Aristocrats List):
| Company | Sector | Consecutive Years of Dividend Growth |
| AbbVie (NYSE:ABBV) | Healthcare | 47 |
| Abbott Laboratories (NYSE:ABT) | Healthcare | 47 |
| Federal Realty Investment Trust (NYSE:FRT) | Real estate | 47 |
| Kimberly Clark (NYSE:KMB) | Consumer staples | 49 |
| PepsiCo (NASDAQ:PEP) | Consumer staples | 48 |
| VF Corp. (NYSE:VFC) | Consumer discretionary | 47 |
| Nucor (NYSE:NUE) | Materials | 46 |
| S&P Global (NYSE:SPGI) | Financials | 46 |
| Archer Daniels Midland (NYSE:ADM) | Consumer staples | 45 |
| Automatic Data Processing (NASDAQ:ADP) | Information technology | 45 |
| Consolidated Edison (NYSE:ED) | Utilities | 45 |
| Lowe’s (NYSE:LOW) | Consumer discretionary | 45 |
| Walgreens Boots Alliance (NASDAQ:WBA) | Consumer staples | 44 |
| Clorox (NYSE:CLX) | Consumer staples | 43 |
| McDonald’s (NYSE:MCD) | Consumer discretionary | 43 |
| Pentair (NYSE:PNR) | Industrials | 43 |
| Walmart (NYSE:WMT) | Consumer staples | 43 |
| Medtronic (NYSE:MDT) | Healthcare | 42 |
| Sherwin-Williams (NYSE:SHW) | Materials | 40 |
| Sysco (NYSE:SYY) | Consumer staples | 39 |
| Franklin Resources (NYSE:BEN) | Financials | 38 |
| Cincinnati Financial (NASDAQ:CINF) | Financials | 61 |
| Aflac (NYSE:AFL) | Financials | 37 |
| Air Products & Chemicals (NYSE:APD) | Materials | 37 |
| ExxonMobil (NYSE:XOM) | Energy | 37 |
| Amcor PLC (NYSE:AMCR)* | Materials | 36 |
| AT&T (NYSE:T) | Communications services | 35 |
| Brown-Forman (B Shares) (NYSE:BF.B) | Consumer staples | 35 |
| Cintas (NASDAQ:CTAS) | Industrials | 35 |
| Ecolab (NYSE:ECL) | Materials | 34 |
| McCormick & Co. (NYSE:MKC) | Consumer staples | 34 |
| T. Rowe Price Group (NASDAQ:TROW) | Financials | 33 |
| Cardinal Health (NYSE:CAH) | Healthcare | 32 |
| Chevron (NYSE:CVX) | Energy | 32 |
| Atmos Energy Corporation (NYSE:ATO) | Utilities | 32 |
| General Dynamics (NYSE:GD) | Industrials | 28 |
| West Pharmaceutical Services Inc (NYSE:WST)* | Healthcare | 28 |
| A.O. Smith (NYSE:AOS) | Industrials | 27 |
| Linde (NYSE:LIN) | Materials | 27 |
| Roper Technologies (NYSE:ROP) | Industrials | 27 |
| Caterpillar (NYSE:CAT) | Industrials | 26 |
| Chubb (NYSE:CB) | Financials | 26 |
| People’s United Financial (NASDAQ:PBCT) | Financials | 26 |
| Albemarle Corp (NYSE:ALB) | Materials | 25 |
| Essex Property Trust Inc (NYSE:ESS) | Real estate | 25 |
| Expeditors International of Washington, Inc (NASDAQ:EXPD) | Industrials | 25 |
| Realty Income Corporation (NYSE:O) | Real estate | 25 |
| International Business Machines (NYSE:IBM) | Information Technology | 25 |
| NextEra Energy Inc (NYSE:NEE) | Utilities | 25 |
But to maintain that Dividend Aristocrat title is not easy and when it comes to mergers, that eliminates their status. Such as United Technologies merging with Raytheon to create Raytheon Technologies. Carrier Global (CARR) was spun off from United Technologies.
Church & Dwight (CHD), Stryker Corp (SYK) were also dropped.
One thing I have learned is that those who are Dividend Aristocrats and those who are Dividend Kings are smart choices to research for investing in a sector.
With that being said, some of these companies are quite high in share price, so on will have to do your research and find out if a stock at $200+, $300+ or $400+ a share is doable. Especially if you intend to purchase 25, 50, 100, 500, 1,000+ more of shares per stock.
For me, I picked out my 5-10 stocks to focus on per sector. But it’s important to note that not many sectors will have five stocks in the Aristocrat Index, let alone the Dividend Kings list. So, you’ll have to do your research.
But for me, the reason why I find the Dividend Kings list so appealing is because they are long standing companies with tradition, increased dividends and while I don’t want to say that I will never expect them to suspend or decrease their dividend, as we are going to see companies like AT&T (known for 34 years of constant dividends hikes) who merged with Discover, will be losing their Aristocrat status.
And who knows what will happen to Exxon Mobile in the future, who has announced that they will be staying at .87 a share, considering the company’s financial situation, it’s a breath of relief for investors that they did not suspend their dividend. But since 2020, it will be another year since 1982 that the oil producer hasn’t raised their shareholder payout. 2020-2021 was a challenging year for energy companies.
So, if you invest long term, I always keep the score card in check (quarterly) to see who makes it on the list for my long term hold or will be cut our from my investment portfolio.
There is no way to predict mergers but these longstanding companies, especially the 33 on the Dividend Kings list have weathered the storm, from every market crash to the most recent Pandemic.
It would be foolish for me to not invest in companies who are part of that elite class known as the Dividend Kings and also those on the Aristocrats list who are not far off becoming a king.
But if you are interested in dividend investing, you’ll have to do your due diligence and research high paying dividend companies who have been consistent in paying and increasing their payments for dividends for the last 5-10 years as well.
