By Lawrence C. Strauss
The S&P 500 Dividend Aristocrats Index, known for its defensive traits in tough markets, has lived up to its billing this year.
The Aristocrats -- companies that have raised their dividends for at least 25 straight years -- have managed to grind out a 2.4% return in 2026 through March 31, including dividends. That's against a very challenging backdrop, most notably the Iran war, rising oil prices, and worries about an economic slowdown.
Owing to those factors and others, the S&P 500 index has fared worse, down 4.4%.
The Aristocrats aren't the only place for investors to find quality income-generating stocks. Another option is the emerging Dividend Aristocrats, as Wolfe Research calls the group of about 70 companies.
These companies have paid out a higher dividend for at least 15 straight years -- not 25 years, but still a long streak of consistent and stable dividend growth.
They include Home Depot, Texas Instruments, BlackRock, United Parcel Service, Lockheed Martin, and Microsoft. Nearly all of these stocks sport attractive yields. Microsoft, the exception, is growing its dividend at a good clip.
The emerging Dividend Aristocrats "are going to capture a greater breadth of sectors, including tech," says Chris Senyek, chief investment strategist at Wolfe Research.
Tech names in the S&P 500 Aristocrats are limited to Roper Technologies and IBM. That's because a lot of tech companies didn't pay a dividend 25 years ago, if they were even around. That precluded them from the Aristocrats, though some like Microsoft should gain admission over the next several years.
Microsoft didn't initiate a dividend until 2003, the same year that chip maker Qualcomm launched one.
There are more tech companies in the emerging Dividend Aristocrats bucket, however. In addition to Texas Instruments, Microsoft, and Qualcomm, there's chip manufacturing gear company KLA, which yields a mere 0.6%. But KLA's quarterly disbursement has gone from $1.05 a share in mid-2022 to $1.90 currently, an 80% boost.
Besides having more exposure to technology stocks, the emerging Aristocrats offer a little more annual earnings growth than the traditional Aristocrats do -- a projected median of 8.6% over the next 12 months versus 7.5% for the current crop, according to Wolfe Research.
Still, some of these Aristocrats in waiting sport pretty low yields. Microsoft's is at 1%. Last year, though, the company boosted its quarterly payout to 91 cents a share from 83 cents, an increase of nearly 10%. That followed an increase of nearly 11% in 2024.
"The yields [for the emerging dividend Aristocrats] tend to be a little bit lower, but you're getting more dividend growth and then probably higher future dividend growth," says Senyek.
There's definitely a trade-off for some of these stocks: lower yields in exchange for higher dividend growth.
Senyek points out that some of these companies with lower yields "tend to be faster-growing companies, and they're reinvesting the cash."
At the same time, many of the emerging Dividend Aristocrats share the same durable characteristics with the existing Aristocrats that the stock market has rewarded this year.
Dan Lefkovitz, a strategist at Morningstar Indexes, pointed out in a March note that dividend stocks this year have benefited from what's known as the HALO trade, which stands for "heavy assets, low obsolescence." "HALO stocks, the thinking goes, are less vulnerable to disruption by artificial intelligence," Lefkovitz observed.
That's not true for all of the emerging Aristocrats, some of which have trailed this year. That includes Microsoft, a longtime tech darling and a member of the Magnificent Seven. Its shares have lost about 23%, including dividends.
The large-cap tech stock trade has lost some luster as investors fret about the impact that artificial intelligence will have on technology companies, software makers, in particular.
Home Depot, meanwhile, has plenty of HALO qualities. Remodeling a kitchen or a bathroom hasn't been taken over by AI just yet.
The stock, which yields 2.9%, has returned about minus 4% year to date, but the dividend provides some ballast in a choppy market. The company has put through regular dividend increases, most recently to $2.33 a share, on a quarterly basis, from $2.30.
Another emerging Aristocrat is defense and aerospace company Lockheed Martin, which yields 2.3% and late last year boosted its quarterly payout to $3.45 a share, up about 25%.
BlackRock, the world's largest asset manager, yields 2.5%. Martin Small, the company's chief financial officer, told analysts earlier this year that the most recent 10% dividend increase demonstrates "confidence in our cash flow generation and durable earnings expansion."
Texas Instruments last September declared a 4% quarterly dividend hike to $1.42 a share, marking the 22(nd) straight year that the analog chip maker has raised its disbursement. The stock, which has returned about 12% this year, yields 3.1%.
Another emerging dividend Aristocrat whose stock has held up relatively well is UPS, which yields 6.9%. The stock is flattish this year. The company has raised its quarterly dividend for 16 straight years, most recently to $1.64 a share in early 2025.
Although there is an ETF that includes all of the traditional Aristocrats -- ProShares S&P 500 Dividend Aristocrats (ticker: NOBL) -- that's not the case for the emerging ones. The Vanguard Dividend Appreciation ETF $(VIG)$ looks for companies that have boosted their dividend payments for at least 10 straight years, while the ProShares S&P MidCap 400 Dividend Aristocrats ETF $(REGL)$ holds stocks of companies with at least 15 straight years of dividend growth.
Whatever the parameters, looking for companies with dividend increase longevity makes good sense in the current investing climate and beyond.
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(END) Dow Jones Newswires
April 03, 2026 21:30 ET (01:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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