The 3 Highest-Yielding Dividend Aristocrats

Guest post by Aristofanis Papadatos from SureDivdend. 

Despite the pandemic, the S&P 500 has nearly doubled off its bottom last year and is now trading at new all-time highs. Consequently, it has become hard for income investors to identify reasonably valued stocks with attractive dividends. The Dividend Aristocrats, the S&P 500 stocks that have raised their dividends for at least 25 consecutive years, have many advantages for income investors. In this article, we will analyze the merits of investing in the Dividend Aristocrats, including the three highest-yielding Dividend Aristocrats, namely Exxon Mobil (XOM), Chevron (CVX), and AbbVie (ABBV).

The 3 Highest Yielding Dividend Aristocrats

The Advantages of Dividend Aristocrats

Dividend Aristocrats have raised their dividends for at least 25 consecutive years. Companies need to have a durable competitive advantage, such as an exceptionally strong brand or engagement in niche markets, with weak competition, in order to achieve such long dividend growth streaks. Therefore, those who invest in this group of stocks gain exposure to companies with robust business models.

Moreover, as the last 25 years include two fierce recessions—the Great Recession in 2009 and the pandemic-driven recession in 2020—it is evident that Dividend Aristocrats are resilient to recessions. During those severe recessions, many companies saw their earnings collapse and cut or suspended their dividends. Only the most resilient ones were able to keep raising their dividends. Resilience to recessions is paramount for income investors, who seek a reliable income stream.

Another advantage of investing in the Dividend Aristocrats is the growing income stream they pay to their shareholders. As retirees face the challenge of inflation, a growing income stream that keeps up with inflation is paramount. Moreover, investors who have not reached their retirement phase can reinvest a growing amount on this group of stocks and reap the benefits of compounding.

3 Highest-Yielding Dividend Aristocrats

High-Yield Dividend Aristocrat #1: Exxon Mobil

Exxon Mobil is the largest oil and gas company by market capitalization. It produces oil and natural gas at a 60/40 ratio, and it is one of the most integrated oil majors, with significant contribution from its refining and chemicals segments.

Thanks to its integrated business model, Exxon used to be the most resilient oil major to recessions. However, this did not prove to be the case last year, in the severe recession caused by the coronavirus crisis. Due to the collapse in the global demand for refined products and chemicals, these two segments incurred nearly record-low margins and hence they did not provide any support to the results of the oil giant. In addition, the price of oil temporarily collapsed and thus the upstream segment suffered severely. To cut a long story short, Exxon encountered a perfect storm last year and thus posted its first loss in more than a decade.

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Disclosure: Members of the Sure Dividend Team are long some of the stocks mentioned.

Disclaimer: Dividend Power is not a licensed or registered investment adviser or broker/dealer. ...

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