Dividend Kings vs. Aristocrats: Which Should You Choose?

April 19, 2022 by Melissa Brock

Dividend investing means a company pays its shareholders money from the earnings on its profits.

The Dividend Kings and the Dividend Aristocrats make up some of the most decorated stocks on the S&P 500 index. The S&P 500 tracks the movements of the 500 largest publicly traded U.S. companies. The Dividend Kings have a record of at least 50 years of consistent dividend increases, while the Dividend Aristocrats have at least 25 years of consistent dividend increases.

If you use military ranks to identify them, you might call each of the Dividend Kings five-star generals and the Dividend Aristocrats four-star generals of the index. Regardless of which you choose (Kings vs. Aristocrats), their individual track records show incredible strength, resilience, and many consecutive years of growth — not an easy feat to achieve.

But if faced with the choice of investing in Dividend Kings vs. Aristocrats, which way should you go? We’ll go over the definition of Dividend Kings and Aristocrats and the reasons you may want to invest in each, as well as supply you with a list of dividend stocks from each camp. Finally, we’ll help you determine the best of both.

What Are Dividend Kings?

Let’s go into a more in-depth overview of Dividend Kings. It’s true that the Dividend Kings are publicly traded companies which have increased their shareholder dividends every year for at least the past 50 years. In addition, they also have a proven track record of rewarding shareholders with regular dividends. In addition to these major tenets, the Dividend Kings also have excellent business models that generate predictable cash flow, generally low debt and superior leadership teams.

They are, quite literally, “kings” of surviving periods of economic instability, including recessions and pandemics, wars and more. They also weather changes in consumer preferences and buying patterns and stand the test of time. In other words, they handle volatility like prize-winning boxers taking punches in a ring and still managing to wind every time.

For example, let’s take a look at Johnson & Johnson. It has a dividend yield of 2.36%, annual dividend of $4.24 and a 60-year track record of dividend increases. Its dividend payout ratio is 54.29%. The company has one of the longest dividend growth streaks in the stock market.

Reasons to Invest in Dividend Kings

One of the best reasons to invest in dividends has to do with adding passive income to your investing portfolio. (If you want to make money in your sleep, investing in passive income might be a great way to achieve it.)

Wide variety of dividend types: Many times, dividend companies offer cash dividends, or cash in return for your shares. You might also receive stock dividends, where a company offers extra shares of stock. The company might also issue special dividends, or extra dividends due to the company doing well during a given period. A company might even give you real estate or another type of physical asset through property dividends. You might even get a choice (whether you receive cash or company stock) through a scrip dividend.
Opportunities to bulk up your portfolio: You may be able to set up a dividend reinvestment plan (DRIP), which means you use your dividend payouts to buy additional shares. This way, you’re always fattening up your portfolio over time.
Additional income stream: Want a surefire way to add a regular source of income to your portfolio, particularly if you want to have a way to give yourself an income stream in retirement? Investing in a Dividend King stock could be the answer.
Reliable dividend growth: Chances are, the Dividend Kings will never stop paying out a dividend. These companies want to reward their shareholders and due to their immense stature, can do so. Even during economic downturns, you can still expect the Dividend Kings to keep providing, year after year. The ability to invest in these powerhouses may offer a lot of comfort to many investors.

What Are Dividend Aristocrats?

If you’re thinking that the S&P 500 Dividend Aristocrats are like the little brother of the Dividend Kings, remember that they still wield immense power and potential. (They’re still like four-star generals!)

Like the Dividend Kings, the Dividend Aristocrats are also publicly traded companies with half of the years of regular dividends — 25 years instead of 50 years. Like the Dividend Kings, the Dividend Aristocrats also generate cash flow, have low debt and other qualifications that make them worthy of investment.

The Dividend Aristocrats can only make it on this elite list if they have a $3 billion market capitalization (market cap), which refers to the dollar amount of all of a company’s shares of stock. The Dividend Aristocrats must also have an average trading volume of at least $5 million for the trailing three-month period before each quarterly rebalancing date.

Reasons to Invest in Dividend Aristocrats

The reasons to invest in the Dividend Aristocrats don’t vary much from the reasons we listed above for the Dividend Kings, such as consistent payouts, strong fundamentals and the ability to weather market volatility, even extreme examples. Take a look at a few additional reasons you may want to invest:

Minimum size and liquidity requirements: The Dividend Aristocrats can’t make it on the top tier without meeting certain market cap or liquidity requirements, so understanding these metrics can help you invest in the right stocks. They must be one of the 500 largest companies listed on stock exchanges, which isn’t actually necessarily the case for the Dividend Kings.
Income production: Reinvesting in additional shares of stock in order to sell later, in retirement, or to live off of now can help boost your current income stream.
Possibly better returns than “regular” dividend stocks: If you’re looking at dividend-paying stocks in general, you may find that the Dividend Aristocrats offer more opportunities because they’re more entrenched in the market and have been for many years.

List of Dividend Kings vs. Dividend Aristocrats

Let’s take a look at the full list of Dividend Kings, below:

You can compare this list to some of the Dividend Aristocrats:

What Are the Best Dividend Kings and Aristocrats?

You may be tempted to gravitate toward the Dividend Kings because they have the longest history of dividend returns. However, there's no one “best” Dividend King or Dividend Aristocrat because choosing the right stock depends on your goals. How do you want to use your dividends? To supplement your nest egg? To enable you to use cash on a monthly basis? The right research based on these goals will help guide you.

Take a look at the fundamentals and valuation of the companies you’re considering investing in. Valuation refers to evaluating a company’s worth. Typically, you want to try to pick stocks that trade for less than their intrinsic or book value. In other words, you want to try to evaluate them based on their stock price and other factors. There’s no sense in investing in a great company if you sink too much into it from the get-go.

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About Melissa Brock

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Experience

Melissa Brock worked as an associate editor & contributing writer for DividendStocks.com from 2021 to 2024.

She currently works as a full-time freelance writer and financial editor covering higher education, investing, personal finance, mortgages, college savings, insurance, and more.

Areas of Expertise

Dividend Stocks, Retirement

Education

Bachelor of Arts in Communication Studies, Central College, Pella, Iowa

Past Experience

Melissa graduated summa cum laude with a bachelor of arts in communication studies with minors in psychology and Spanish from Central College. She's a longtime member of the National Association of College Admission Counseling (NACAC). While working in college admission, Melissa Brock pursued a freelance writing and editing career.