Dividend Aristocrats vs. Dividend Kings: Comparing Long-Term Dividend Track Records

Investors looking for established stocks to add to their portfolio often turn to companies with long-term records of dividend payments. Dividend Aristocrats and Dividend Kings are two groups of companies with impressive dividend track records.

What Are Dividend Aristocrats and Dividend Kings?

Dividend Aristocrats are companies in the S&P 500 that have increased their dividends for at least 25 consecutive years. To qualify as a Dividend Aristocrat, companies must also meet certain liquidity and market capitalization requirements.

Dividend Kings are even more exclusive. They are companies that have increased their dividends for at least 50 consecutive years. This group is much smaller than the Dividend Aristocrats, with only 27 companies currently holding this distinction.

Why Do Dividend Aristocrats and Dividend Kings Matter?

Dividend Aristocrats and Kings are often considered to be low-risk investments because they have a track record of consistent dividend payments through multiple market cycles. These companies have demonstrated their ability to maintain their business operations and generate steady cash flows, which allows them to continue paying dividends.

Investors looking for reliable and consistent income often turn to these companies because of their long history of dividend payments. Additionally, some investors believe that companies with a long history of dividend payments are better-managed businesses because they have a disciplined approach to capital allocation.

Comparing Dividend Aristocrats and Dividend Kings

The main difference between these two groups is the length of their dividend track record. Dividend Kings have a longer track record of increasing dividends than Dividend Aristocrats.

However, the size and liquidity requirements for Dividend Aristocrats can provide some additional safety for investors. These requirements ensure that the companies are well-established and capable of weathering economic downturns.

Another key difference between these two groups is the number of companies that fall into each category. There are currently 65 Dividend Aristocrats compared to only 27 Dividend Kings. This means there are more investment opportunities among the Dividend Aristocrats.

Conclusion

Both Dividend Aristocrats and Dividend Kings can provide reliable income for investors. The main difference is the length of their dividend track record. While Dividend Kings have a longer track record of dividend increases, Dividend Aristocrats have additional safety measures in place due to size and liquidity requirements. Investors looking for long-standing dividend payments can benefit from adding either group of companies to their portfolio.