NEW YORK (TheStreet) -- Among the most noble of dividend stocks are Standard & Poor's Dividend Aristocrats -- a collection of companies that have raised dividend distributions for 25 years or more.
But for 2012, aristocratic changes are afoot.
As of Dec. 16, 2011, S&P will change the methodology of the Dividend Aristocrats index. Now, only regular dividends will count toward a year-end payout tally; special dividends will be ignored.
The index will also rebalance to include 10 new entrants; one stock -- CenturyLink (CTL) -- will fall off the ranks. This omission should come as no surprise to regular readers, CenturyLink failed our dividend acid test in 2010.Similarly, two of the three stocks dropped from last year's index -- Supervalu (SVU) and Integrys (TEG) -- also failed our acid test (Eli Lilly (LLY) passed our test, but was still dropped from the index in 2011). To help you decide whether or not the newest Dividend Aristocrats will make a worthwhile addition to you portfolio, the following pages contain 10-year snapshots of each company's market performance. Also, we will explore each company's valuation and assign a PASS or FAIL dividend score. Pass = Dividend yield less than LACFY, Fail = Dividend yield greater than LACFY To determine liability adjusted cash flow yield, a "short formula" was used, defined as: 5-Year Average Free Cash Flow / ((Outstanding Shares x Per Share Price) + (Liabilities - Cash)) Of course, a failing grade does not ensure that a dividend cut or elimination is imminent, but rather, that the failed company may have difficulty continuing payouts in the face of operational adversity or a large debt maturity. Similarly, a passing grade offers no guarantee that a company will not face a prolonged hardship or that the company's management will sustain its current dividend policy. Investors must always be cautious. To get a more rounded view of each company's financial situation, the following pages include TheStreet Ratings' financial analysis and stock rating for each respective company. All of this data, when considered together, may help you decide the investment potential of the newest Dividend Aristocrats.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV