Dividends Aristocrats

At the one end of the extreme spectrum of speculative investments are famous FAANG’s (Facebook, Apple, Amazon, Netflix and Google). A lot has been said about these companies lately. There is no consensus, but you need to have a huge risk appetite and be risk-averse to have investments in these companies. On the other end of the spectrum are the so-called dividend aristocrats – blue-chip companies that pay high dividends.

As the investors are getting more and more concerned with the possibility of the market downturn, they are looking for “safer” investments. One of such candidates is Chevron. Its current dividend yield is 3.6%.  It has been increasing its dividends for 31 consecutive years!

Here are the data for the latest four years:

Dividends paid in 2014: $7,928,000,000

Dividends paid in 2015: $7,992,000,000

Dividends paid in 2016: $8,032,000,000

Dividends paid in 2017: $8,132,000,000

In addition, the long-term debt of the company has been steadily decreasing over the past four years (by approximately 10 billion USD) and the balance sheet is as strong as ever.

While P/E ratio would not necessarily qualify this stock as a “value” propositions (the current TTM P/E is about 19.5), the company generates tonnes of cash (net income in 2017 was $9,195,000,000). As you are thinking about mitigating the risk of your portfolio, start thinking about dividend-paying companies.