Get Rich with Dividends: A Proven System for Earning Double-Digit Returns

The Index

The Dividend Aristocrat Index is currently made up of 51 companies and is rebalanced every year. If a company raises its dividend for the twenty-fifth consecutive year, it is added to the index the following December. If a company fails to raise its dividend, it is removed.

In order to qualify to be an S&P Dividend Aristocrat, a stock must meet these four criteria:

1. Be a member of the S&P 500 index

2. Have increased its dividend every year for at least 25 years in a row

3. Have a market capitalization of at least $3 billion on the day the index is rebalanced

4. Trade a daily average of at least $5 million worth of stock for the six months prior to the rebalancing date

In 2012, ten companies, including Nucor (NYSE: NUE), were added to the index, while one company, CenturyLink (NYSE: CTL), was dropped.

Each company is given equal weight in the index. This means that the size of the company isn’t a factor in the calculation of the performance of the index. A company with a $20 billion market cap has the same impact on the index as a $40 billion company.

Some other variables can impact a company’s ability to be placed in the index, such as sector diversification. But these other considerations don’t come into play often. The most important factors are 25 years of consecutive dividend increases and being a member of the S&P 500.

The index is great for showing you all kinds of performance statistics as to why Dividend Aristocrats make excellent investments and how they ...