Research Dividend Achiever’s Index
As tracked by Mergent Inc., these companies have increased annual regular dividends for at
least the past 10 consecutive years while meeting certain liquidity-screening criteria:
Enterprise Products Partners L.P. (EPD) — 10 Years
MDU Resources Group Inc. (MDU) — 18 Years
National Retail Properties Inc. (NNN) — 19 Years
Northwest Natural Gas Co. (NWN) — 53 Years
Procter & Gamble Co. (PG) — 55 Years
RPM International Inc. (RPM) — 35 Years
WGL Holdings Inc. (WGL) — 32 Years
W. P. Carey & Co. (WPC) — 10 Years
Source: Mergent, 2008
When markets face challenging times, investors often look to safer, steady investments. In 2009, the disciplined approach of companies included in the U.S. Dividend Achievers Index serves as a model of the corporate performance, risk management and total returns that many investors may be looking for, experts say.
“As more investors are concerned about lower-risk investments, a company with a long-term track record of annually increasing its dividends tends to mitigate some of the risk based upon this track record, which results in lower volatility for Dividend Achiever companies and/or products, compared to the S&P 500 Index,” explains Bob Andrialis, director of index licensing for Indxsis Inc., the index-services unit of the business-information firm Mergent Inc.
Recently, Mergent removed 63 companies from the Broad Dividend Achievers Index and added 23 new companies. The index now includes 283 firms.
“Investing in companies producing increasing and sustainable dividend increases over long periods of time has been a priority for many investors, as it generally shows the quality of the company, consistency of financial performance, capabilities of management and good corporate governance,” Andrialis says.
Historically, dividends have accounted for 40 percent of the total return for the Dividend Achievers Index compared to about 25 percent for the S&P 500 Index.
“As you reinvest these dividends and benefit from the effects of compounding over long periods of time, you find that the Dividend Achievers Index has outperformed on a total return basis on lower volatility,” adds Andrialis. “Said another way, the Dividend Achievers Index generally results in higher returns at lower risk (more for less). One reason for this is that the Dividend Achievers Index does not have technology companies in it as many have only paid dividends for a few years, while the S&P 500 includes technology companies and hence the increase in volatility.”