It’s officially a Guinness World Record…
Prince Harry’s newly published memoir “Spare” is the fastest-selling nonfiction book ever. It racked up over 1.4 million sold copies on the first day of its release last week.
According to a director at the publisher Penguin Random House, “As far as we know, the only books to have sold more in their first day are those starring the other Harry (Potter).”
Clearly, people around the globe are obsessed with the British royalty.
Personally, I don’t get it.
But I’ll tell you what; I’m all caught up on a different kind of royalty: dividend royalty.
I’m talking about Dividend Aristocrats and Dividend Kings. Those are fancy names for companies that have raised their dividends for 25 years and 50 years in a row, respectively.
These are the kinds of companies that you want in the core of your portfolio, especially in times like now when a recession may be looming.
Today, I’ll tell you why these are the only “royals” you should follow to build your wealth, a one-click way to get exposure to them in your portfolio, and give you more details on a special project we launched this week to target the best of these companies.
The Three Moves These “Royals” Make in Good Times
When times are uncertain, the thing investors crave more than anything else is safety. And for that, they turn to the tried and the true.
Dividend Aristocrats fit the bill, as they have been in business for decades.
And here’s the thing about long-lasting businesses: They have experience and discipline.
A company with a 25-year dividend growth streak today would have started increasing its dividend in the late 1990s, just before the Tech Crash. That means it kept rewarding shareholders through the Financial Crisis, the pandemic, and three recessions.
Companies with this kind of history have built up institutional knowledge and know what steps to take to weather a downturn.
Not only do they survive, they keep increasing their dividends even when times are tough.
It takes an incredible amount of discipline to manage a growing dividend for 25 or more years. Sure, it’s easy when the economy is roaring. But these companies know good times don’t last forever.
Here are three things these companies do in difficult times that pays off when the economy and broad market take a hit:
They diversify their sources of earnings, so they’re not as vulnerable.
They manage their debt levels, so they never have to worry about a call from the bank.
They don’t raise their dividends to unsustainable levels that they’ll later have to cut.
And it clearly makes a difference. My team of analysts has studied dividend-paying companies over the past decade.
You know what they found? Companies with 25-year dividend growth streaks – or more – were five times less likely to cut their dividends compared to companies with less than 10 years of dividend growth history.
Why Putting Dividends First Matters
Sustaining a long-standing dividend growth streak is a point of pride and can become a part of the company’s culture. So much so that it can bend over backwards to keep a growth streak alive.
Take Sysco (SYY) for example. It’s one of the largest food distributors, providing restaurants and cafeterias with the supplies they need to operate.
The pandemic forced thousands of Sysco’s customers to shut down, and many went out of business. Sysco’s earnings tanked to 40% of what it made in 2019.
But the company kept devoutly paying its dividend, even when it amounted to 25% more than it was earning. That’s because Sysco had confidence that its business would eventually rebound. And it had managed its debt well, laddering bonds out to the 2050s, so it was not in danger of going under.
A younger company would likely have been less prepared and cut its dividend in a panic. But Sysco’s long history gave it the experience and discipline it needed to manage through the crisis.
Today, the company is earning more than it did pre-pandemic. And Sysco is now in its 52nd year of dividend growth.
You can see why Dividend Aristocrats deserve their elite status.
That’s why they’re a core part of a new project we’ve launched at Wide Moat Research.
Based on years of testing and research, we’ve constructed a portfolio that’s statistically proven to experience a fraction of the volatility other stocks have seen in recessions. Not only that, but it can help you get back on track with your retirement goals – even if you’ve suffered a major setback.
We start with the best businesses among Dividend Aristocrats and Dividend Kings, spread our risk across multiple assets and sectors, run them through a 1,000-point safety system to minimize risk, and focus on maximizing income.
I encourage you to watch a special in-depth presentation we’ve put together introducing you to this strategy. It’s free to watch and our special launch offer ends soon.
Meanwhile, if you’re looking for an easy way to get your feet wet with these companies, check out the ProShares S&P 500 Dividend Aristocrats ETF (NOBL). This ETF only holds names that have earned the coveted “Aristocrat” designation.
Earning the title of dividend royalty is no easy feat. So making these names part of your long-term investing strategy is key to boosting your portfolio and earning income for decades to come.
Happy SWAN (sleep well at night) investing,
Editor, Intelligent Income Daily