10 Best Dividend Achievers to Buy According to Hedge Funds

Fatima Farooq
11 min read

In This Article:

In this article, we will be looking at the 10 best dividend achievers to buy according to hedge funds. If you want to skip our detailed analysis of dividend investing, you can go directly to the 5 Best Dividend Achievers to Buy.

According to a Reuters report on July 2nd, as investors began grappling with the news that Treasury yields would not be too exciting in the latter half of 2021, the focus was rapidly shifted to dividend-yielding stocks that were offering more attractive payouts as compared to government bonds in the US. As dividend-yielding stocks began to thus gain traction again this July, it has become important to be able to differentiate between relatively safe and risky dividend investments. This is where the dividend achievers can play a role.

What is a Dividend Achiever?

Any company that has regularly increased its dividend yield for at least 10 years, and meets certain liquidity requirements, is referred to as a dividend achiever. These companies must be listed on the NYSE or Nasdaq, but need not be part of the S&P 500. Dividend achievers also must have an average daily cash volume of about $500,000 in November and December before the reconstitution date of the Index.

All dividend stocks, like Morgan Stanley (NYSE: MS), McDonald's Corporation (NYSE: MCD), Medtronic plc (NYSE: MDT), and The Goldman Sachs Group, Inc. (NYSE: GS) among many others, offer attractive returns and dividend safety for the most part. Dividend stocks have been renowned for being able to outperform the market in the past. For instance, the returns of dividend-paying stocks between 1973 and 2020 were about 12.83%, as compares to non-dividend payers within the same time period with lower returns at 12.18%. According to Reuters this July, the ProShares S&P Dividend Aristocrats ETF was up 14.3% so far in 2021, while the S&P 500 only witnessed a 15.8% rise. Even when you're not considering a dividend stock's ability to outperform the market, just knowing that between 1900 and 2000, dividends were the main contributors to the S&P 500 Index's total return of 10.4% by contributing about 5.5% of that figure, should be proof enough that these stocks have a major role to play in the market. This reality thus allows for more investors to be pulled in by attractive dividend stocks with decent yields and the prospect of being able to establish a reliable passive income stream, especially during times of financial volatility.

With the above in mind, while it becomes tempting to invest in the next best dividend stock right away, it is important to consider a range of other factors before making any investment decisions. For instance, considering a dividend stock's long-term revenue growth is an important factor to take note of. Data collected by Oppenheimer Funds has indicated that those dividend stocks that grew their payouts at least for several years consistency managed to outperform other dividend stocks that did not grow their payouts, but rather maintained them at the same rate. The former was able to outperform the latter by about 2.4% every year between 1972 and 2013. This one factor alone shows the importance of considering all possible relevant factors when picking dividend stocks for your portfolio.

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