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Are the Aristocrats, Kings & Champions Really Worth Following

If there is one thing Wall Street loves, it’s a clever marketing term. BRICs, Smart-Beta, Black Swans…the Street loves them all. Most likely because it’s easy to build a product or fund around a slogan. And as investors, it seems we can’t get enough of them either. At its peak, Goldman Sachs had nearly a billion dollars worth of assets in its BRIC mutual fund.

As dividend investors, we’ve all flocked to the concept — and the marketing — behind the so-called Dividend Aristocrats. Or Kings. Or Champions for that matter.

The concept of firms that have never decreased their payouts and offer long-term dividend growth is certainly appealing. But the real question is whether or not it’s just marketing fluff or actually full of substance.

Dividend Growth + Long Time Periods

The notion of the dividend aristocrats plays into dividend investors’ love of consistency. The official definition of S&P’s aristocrats are companies in the bread-and-butter S&P 500 Index that have increased dividends every year for the past 25 straight years. The definition of the Dividend “Kings” and “Champions” are similar, but the timelines are slightly different.

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