In this episode, I cover Dividend Aristocrats and Kings.
I also cover the following topics in this episode:
- What are dividends?
- What are dividend aristocrats?
- What are dividend kings?
- Which companies have the longest dividend streaks?
- Three extraordinary dividend returns (KO, HD, WMT)
Disclaimer: The views and opinions shared on this channel are for informational and educational purposes only. Simply Investing Incorporated nor the author and guests shall be liable for any loss of profit or any commercial damages, including but not limited to incidental, special, consequential, or other damages. Investors should confirm any data before making stock buy/sell decisions. Our staff and editor may hold at any given time securities mentioned in this video/course/report/presentation/platform. The final decision to buy or sell any stock is yours; please do your own due diligence. Stock buy or sell decisions are based on many factors including your own risk tolerance. When in doubt please consult a professional advisor. No advice on the buying and selling of specific securities is provided. All trademarks, trade names, or logos mentioned or used are the property of their respective owners. For our full legal disclaimer, please visit our website.
In this episode, I cover Dividend Aristocrats and Kings.
I also cover the following topics in this episode:
- What are dividends?
- What are dividend aristocrats?
- What are dividend kings?
- Which companies have the longest dividend streaks?
- Three extraordinary dividend returns (KO, HD, WMT)
Disclaimer: The views and opinions shared on this channel are for informational and educational purposes only. Simply Investing Incorporated nor the author and guests shall be liable for any loss of profit or any commercial damages, including but not limited to incidental, special, consequential, or other damages. Investors should confirm any data before making stock buy/sell decisions. Our staff and editor may hold at any given time securities mentioned in this video/course/report/presentation/platform. The final decision to buy or sell any stock is yours; please do your own due diligence. Stock buy or sell decisions are based on many factors including your own risk tolerance. When in doubt please consult a professional advisor. No advice on the buying and selling of specific securities is provided. All trademarks, trade names, or logos mentioned or used are the property of their respective owners. For our full legal disclaimer, please visit our website.
In this episode we'll cover what are dividend aristocrats and dividend kings in the US and in Canada. Hi, my name is Kanwal Sarai and welcome to the Simply Investing Dividend Podcast. In this episode, we're going to cover the following five topics. We'll start off with what are dividends, then we're going to take a look at what are dividend aristocrats, then we'll look at what are dividend kings, and then we'll take a look at two examples of companies one in the US and one in Canada with the longest dividend paying streak, and then, finally, we'll take a look at some real-life examples of extraordinary returns. So dividends are essentially the company sharing its profits with you, the shareholder. So, for example, if a company is paying a dividend of $1 per share and you own 1,000 shares, you will receive $1,000 for every year for as long as you own those shares and as long as the company continues to pay the dividend. Now you can spend that money if you wish, or you can reinvest it. The dividends are deposited directly into your trading account as cash and we'll take a look later on in this episode as to what happens to the dividend when the share price drops or if the share price goes up. Now let's move on to our next topic in this episode, and that is what are dividend aristocrats? Now, it's really simple. There's only two criteria that a company has to meet when it comes to dividend aristocrats in the US. So, first off, the company must be part of the SNMP 500. And then the second requirement is that the company has had 25 years or more of consecutive dividend increases. So if we take a look at the US today and as of this recording, there are 67 companies that are referred to as dividend aristocrats. So I'm going to show them up on the screen here.
Speaker 1:There's going to be a big list because there's 67 companies and we're not going to have time to go through all of them. If you're watching this video, feel free to pause. You can review the list at your own time. I'll just mention a couple of the companies. I'm not going to mention them all. We can see up on the list. We have Abbott Laboratories, we have ADM, we have Caterpillar, chevron Church and Dwight. We also have companies like Coca-Cola, colgate, palm Olive, exxon, general Dynamics, ibm, and then we have McDonald's, lowe's, procter Gamble. So these are a lot of the companies. You will recognize our household names. We also have Johnson Johnson on the list. And then we also have Stanley, Black Decker, walmart, and so these are the types of companies that are on this list. So there's 67, as of this recording, that are dividend aristocrats, which means that they have been paying dividends and increasing dividends consecutively for 25 years or more.
Speaker 1:Now let's take a look at Canada. Now, if you Google dividend aristocrats for Canadian companies, you're going to find different results. A lot of the sites out there are showing that for Canada, as long as a company has had five years of consecutive dividend increases, then they will consider it to be a Canadian dividend aristocrat. But I'm not going to do that. I'm going to be a little different. I want to compare apples to apples. So here's my criteria, or my definition for a Canadian company to be selected as a dividend aristocrat. So, of course, it must be a Canadian publicly traded company. And then the second requirement is going to be the same as what we had for the US companies it must be a company that has had 25 years or more of consecutive dividend increases. So when we take a look at that, we see that today, as of this recording, in Canada there are 10 companies that meet that criteria. So 10 dividend aristocrats. You can see the list up on the screen now. We have Atco, we have Canadian National Railway, canadian Utilities, empire, enbridge, fortis, imperial Oil, metro, thomas, reuters and Tourmont Industries. So those are the 10 Canadian companies that are the dividend aristocrats.
Speaker 1:Now let's move on to our next definition what are dividend kings? So the requirement for this is actually quite simple it's that a company must have had, or has, 50 years or more of consecutive dividend increases. Now think about this 50 years is a very long time. These companies have raised and paid dividends through 7 recessions through an oil embargo in 1973 and 74, through double-digit interest rates in the 1980s, through Black Monday 1987, through 9-11, the dot-com bubble in 99 and 2000, the 2008 financial crisis and then, most recently, the coronavirus crash of 2020. So that is a lot of market downturns and a lot of market crashes over the last 50 years.
Speaker 1:But in the US alone, as of this recording, there are 56 companies that we can refer to as dividend kings. Again, I'm not going to go through the list of all 56 companies. They are up on the screen here. Feel free to pause the video and you can take a look at the list. I'll highlight some of them on the screen now, and then we're going to move on to the Canadian companies. So right now we're just looking at the US companies and there's 56 dividend kings. So these are companies like, again, colgate, palm Olive, so a lot of the same names will repeat themselves here. Adm is on the list as well. Again, abbott Laboratories is there, we have Coca-Cola, we have Lowe's, pepsi, johnson, johnson, and then we also have Stanley, black and Decker, we've got Walmart. So these companies are all part of the dividend kings. So that's an impressive track record of 50 years or more of consecutive dividend increases. Now when we look at Canada and we apply the same rule, the list is much, much smaller. And, as of this recording, there is one company in Canada which we can now refer to as a dividend king, and that is Canadian Utilities. They have had, in fact, 51 years of consecutive dividend increases.
Speaker 1:Now let's take a look at two examples of companies one in the US, one in Canada of companies that have been paying the dividend for the most amount of time. So when we take a look in the US, there is one company that holds the record as an American company that has been paying a dividend for the longest amount of time, and that company is the York Water Company. They have been paying dividends since 1816. That is more than 207 years of paying dividends. That's an incredible track record. So I'm gonna say it again this company has been paying dividends since 1816, which means they've been paying a dividend for over 207 years. So, again, an incredible track record. Think about how many market crashes we've had, how many market recessions we've had in the last 200 years, but yet this company has continued to pay a dividend year after year after year, which is an incredible, incredible track record.
Speaker 1:Now let's take a look at a Canadian company. So there's one company in Canada that holds the record for paying the dividend for the longest amount of time, and that is the Bank of Montreal. They have been paying dividends since 1829. So that is 194 years more than 194 years of paying a dividend, which is, again, incredible. Think of how many market crashes, how many recessions over the last 190 years. But this company, the Bank of Montreal, has been consistently paying dividends. So, as a dividend investor, that is a remarkable track record.
Speaker 1:If you're looking for companies that are gonna be around for the long term, that have a track record of consistent, reliable dividends, these are the kinds of companies you wanna look at. Take a look at the dividend aristocrats, the dividend kings. Take a look at these two companies that have been paying dividends for the most amount of time. So that's an impressive track record to look at. Now let's move on to our final topic in this video, and I'm gonna share with you three examples of extraordinary returns of dividend stocks. So these are real life examples, and it highlights the possibilities of what is possible when it comes to making dividend income and to growing your portfolio through capital gains as well, and so you're gonna see some extraordinary returns, but this is all possible.
Speaker 1:So let's take a look. We're gonna start first with Coca-Cola. Now, coca-cola has had 62 years of consecutive dividend increases. That is still an impressive track record. Now, if we take a look at the Coca-Cola stock price chart that's up on the screen right now, we're looking at the last 38 years. I wish I could go further back, but unfortunately, this graph that we're looking at only goes back 38 years, so it's about almost 40 years, right? Yeah, I wish it would go back 50 or 60 years, but this is what we can look at today, which is still very impressive. So, over the last almost 40 years, you can see the Coca-Cola stock price has gone up and down. That's the blue line up on the screen and what's impressive is the orange line. The orange line represents the Dividends and you can see that the line goes up year after year after year after year. It never goes down Because, like I said, we're looking at the 40 year chart here. In fact, coca-cola has consecutively increased dividends for more than 62 years, so the dividend keeps going up.
Speaker 1:But take a look at the stock price. There's times when the stock price drops by five dollars a share, ten dollars a share, even more than twenty dollars a share Drop in the stock price. So how can a company like this continue to not only pay a dividend but increase a dividend when its own stock price Tanks? And the reason is that the dividends are not paid From the stock price. The dividends are paid from the earnings and and. As long as the company is profitable over the long term and the earnings are growing, then the company can afford To not only pay the dividend but also increase the dividend as well. So that's why, for us, as dividend investors, the dividend and and the dividend income is a much higher priority and much higher focus for us, then the stock price.
Speaker 1:Stock prices are fleeting. They go up and down all the time. You could have a stock that goes up ten dollars a share today and then it drops by ten dollars a share tomorrow or by twenty dollars a share, right. So stock prices go up and down all the time, but what we can rely on for Providing us with income, an immediate return on our investment while we hold on to the shares, is, in fact, the dividend. So now we're going to take a look at three examples of extraordinary returns. Now, if anybody is interested in learning more about the details and the specifics, I cover all of that in episode seven. So I encourage you to go back and watch episode seven if you want to learn more about the extraordinary returns that you can get with dividend stocks, just to see what's possible.
Speaker 1:But in today's episode, right now, we're going to jump into three examples. So I'm going to show you an example with Coca-Cola, home Depot and Walmart. Now here's the thing with dividends at the beginning, the dividends will feel very small, almost insignificant. But over time and as I've shown you with the dividend aristocrats, the dividend kings is over time, over decades, the dividends keep going up every year and every time the dividend is increased, that's more money in your pocket as a dividend investor. So over time you will start to earn more in dividends and as you start to reinvest those dividends and as you start to get more and more dividends, you're able to invest more and more money. So there's almost a snowball effect. That happens in the later years but not in the beginning. So anyway, let's stick with this example for now.
Speaker 1:Like I said, episode seven has got more details in there, but we're going to take some general amounts of investments and see what happens over time. So with Coca-Cola we're going to start in 1960, home Depot 1981, walmart 1970. So let's start with Coca-Cola. In 1960, had you invested $4,600 in Coca-Cola stock and just held onto it you didn't buy or sell any more shares, you just held onto it. Today that investment would be worth over $7 million. So think about that A $4,600 investment eventually turned into over $7 million in total value. But what's even better is that those shares in Coca-Cola today would provide you with over $200,000 a year in dividend income. If you want to be specific, it's $202,752. So that is an extraordinary return.
Speaker 1:Let's move on to Home Depot, and Home Depot we're going to say let's say you started in 1981 and you invest $2,100 in Home Depot, that investment today would be worth over $10.8 million. And even better, that investment today would provide you with more than $259,000 a year in dividend income. And again, you didn't have to buy or sell more shares, you just had to hold onto them for that many years. And the last example is Walmart. And so Walmart in 1970, had you invested $1,650, in the last year you would have to buy or sell more shares. And in 1970, had you invested $1,650 in Walmart in 1970 and just held onto it, those shares today would be worth over $29.2 million. And it gets even better those shares today would provide you with over $458,000 in annual dividend income. So that's this year, and then next year, hopefully with dividend increases, it would be even more than $458,000 in dividend income. All three companies have a solid track record of increasing their dividend year after year after year. So if we add it all up as a combined portfolio, just in three companies Coca-Cola, home Depot, walmart total investment would have been $8,350. And that's it. You just would have sat on that $8,350 total investment. Combined, those shares would be worth over $47.2 million today, which is incredible. Even better, just those three companies alone, your annual dividend income would be over $921,000 a year in dividend income.
Speaker 1:Now I know what some of you are thinking 1960, 1970, 1981 that is a long time ago. Some of you weren't even born then. But consider, look at the numbers on the screen. If you achieve even half of that, or even 20% of that, or even 10% of that, it is an incredible achievement. And you didn't have to start 40, 50, 60, 70 years ago. You could have started 5, 10, 15, 20 years ago. Right started investing. So it's the decisions you make today that will impact your Dividend income and your livelihood in the future.
Speaker 1:So does that mean that you should go out and buy any stock today that pays a dividend? And the short answer is no. There's a couple of more things that we need to look at before you can invest in any dividend stock. So our approach is to invest in quality, dividend paying Stocks when they are priced low. So the key word here is not just any stock has to be a dividend stock, not just any dividend stock has to be a quality stock and not just any quality stock. It has to be priced low. It's got to be undervalued, okay, not priced high. If it's priced too high, then we're not interested in investing in that. So how do you know, when you're looking at any stock anywhere in the world? How do you know, when you're looking at it, if it's a quality stock, if it's a dividend stock and if it's priced low?
Speaker 1:So for that I've created what I call the 12 rules of simply investing. This is your checklist. A company has to pass all of all 12 rules before you invest in it. If it fails even one rule, skip it, move on to something else. So this list is going to reduce your risk and and maximize your gains. So you can see all of the 12 rules up on the screen here.
Speaker 1:Rule number one Do you understand how the company is making money? If not, skip it, move on to something else. Rule number two 20 years from now, will people still need its product and services? Rule number three does the company have a low-cost competitive advantage? Rule number four Is it recession proof? Rule number five Is it profitable? Rule number six Does it grow its dividend? Rule number seven Can it afford to pay the dividend? Rule number eight is the debt less than 70%? Rule number nine avoid any company with recent dividend cuts. Rule number ten does it buy back its own chairs? Rule number eleven is stock priced low. That's where we look at the P? E ratio, the PB ratio, and we also compare the current yield to the company's 20 year average dividend yield. And rule number 12 keep your emotions out of investing.
Speaker 1:So, for those of you that are interested, I've created an online course. It's a self-paced online course the simply investing dividend course and it covers Everything that you see on the screen here. There's 10 modules. The first module we covered the investing basics. Module two we cover the 12 rules of simply investing. Module three you learn how to apply the 12 rules Using a Google sheet. Module four you learn how to use a simply investing platform. Module five Placing your first stock order. So we show you how to do that, step by step. Module six building and tracking your portfolio. Module seven went to sell, which is just as important as to know when to buy. Module eight how to reduce your fees and risk, especially when it comes to mutual funds, index funds and ETFs. Module nine your action plan for getting started Right away. And module 10 answering your most frequently asked questions.
Speaker 1:We also have the simply investing platform that applies these rules to over 6000 companies in the US and in Canada every single day. So immediately you can see which companies pass which of the rules, which companies fail which of the rules. So if there's companies that are overvalued, then you know that you can skip them for now and Focus on something else. So if anybody is interested in the course or the platform, you may want to write down the coupon code we have save 10. S, a, v, e. 1 0. Save 10 is going to save you 10 percent off of our course or the platform. So if you enjoy today's video, be sure to hit the subscribe button. We have a new episode out every week. Hit the like button as well and for more information, take a look at our website. Simply investing calm. Thanks for watching.