Barron's has studied the S&P 500 Dividend Aristocrats index, which combines companies that have been raising dividends for at least 25 years, and has identified the ten with the highest payouts to shareholders. At the same time, the publication warns of risks:  generous dividend yields can be wiped out by a fall in share prices.

Details

Barron's identified the ten companies with the highest dividends in the S&P 500 Dividend Aristocrats index - which includes 69 issuers that have raised their payouts to shareholders continuously for at least 25 years. Here's that list:

1. Franklin Resources, which engages in asset management (its dividend yield is 5.6%)

2. packaging company Amcor (5.6%);

3. Realty Income real estate investment trust (5.5%); 

4. investment company T. Rowe Price Group (5.4%); 

5. building materials manufacturer Stanley Black & Decker (5.1%);

6. energy company Eversource Energy (4.8%); 

7. retail chain Target (4.7%); 

8. energy company Chevron (4.7%); 

9. Federal Realty Investment Trust (4.6%); 

10. food and beverage manufacturer J.M. Smucker (4.4%).

Those who want to diversify their portfolio should consider investing not in individual securities, but in the entire index - through the ProShares S&P 500 Dividend Aristocrats exchange-traded fund, Barron's suggests. The index's dividend yield is about 2.2%, the publication points out.

What are the risks to investors?

Barron's warns that while high dividends are attractive, such yields may signal an impending cut and internal business problems, as well as being the result of poor stock performance. 

The publication cites the example of retailer Target, whose stock price has fallen 28% since the beginning of the year due to competition with innovative and well-capitalized giants like Walmart. To comfort investors, the company announced a nearly 2% increase in its quarterly dividend, from $1.12 to $1.14 per share, and said it is moving toward increasing its annual payout for the 54th straight time. That will provide some protection against losses while shareholders await improved operating results, Barron's writes.

Another «underdog» on Barron's list this year is T. Rowe Price. Even including its dividend payout, shareholders lost 15%. J.M. Smucker's stock is down 13%, Federal Realty Investment Trust is down 16%, and Stanley Black & Decker is down about 17.5%. Shares of J.M. Smucker are down 13%, Federal Realty Investment Trust is down 16%, and Stanley Black & Decker is down about 17.5%;

The publication also reminds us that while companies are rarely excluded from the index, sometimes it does happen -as in the case of Walgreens Boots Alliance and VF Corp. Both of those companies had their payouts cut.

Papers with the highest dividends tend to attract value investors and behave «more cynically» than other index participants, according to Simeon Hyman, global investment strategist at ProShares. He urged caution in this market, but added that a long history of dividend growth is certainly a sign of quality.


This article was AI-translated and verified by a human editor

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