Stock and mutual fund dividends rank high as passive income sources. Passive income comes into play automatically as soon as you stake claim to securities that pay dividends. Adding another feather is that the dividends have appreciation potential that ensures inflation is kept in check. This link shows the list of dividend aristocrats (25 consecutive years of increased cash payments) from the S&P 500 index. Below is a list that shows the historical compounded annual growth rate (CAGR) of dividends of the companies in the S&P 500-dividend aristocrat index over the 10 years through EOY 2011:
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| Symbol | Company | Dividend CAGR |
| MMM | 3M Co | 6.1 |
| ABT | Abbott Laboratories | 9.18 |
| MO | Altria Group | 6.49 |
| BUD | Anheuser-Busch Cos | 9.76 |
| ADM | Archer-Daniels-Midland | 10.84 |
| ADP | Automatic Data Proc | 13.25 |
| AVY | Avery Dennison Corp | 6.66 |
| BAC | Bank of America | 12.91 |
| BCR | Bard (C.R.) | 5.24 |
| BBT | BB&T Corp | 10.15 |
| BDX | Becton Dickinson | 12.95 |
| CTL | CenturyTel Inc | 4.69 |
| CB | Chubb Corp | 7.18 |
| CINF | Cincinnati Financial | 11.09 |
| CLX | Clorox Co | 9.6 |
| KO | Coca-Cola Co | 9.28 |
| CMA | Comerica Inc | 8.36 |
| ED | Consolidated Edison | 1.00 |
| DOV | Dover Corp | 7.73 |
| EMR | Emerson Electric | 5.93 |
| FDO | Family Dollar Stores | 11.14 |
| FITB | Fifth Third Bancorp | 15.69 |
| FHN | First Horizon Natl | 10.55 |
| GCI | Gannett Co | 7.73 |
| GE | Genl Electric | 10.84 |
| GWW | Grainger (W.W.) | 10 |
| JNJ | Johnson & Johnson | 14.2 |
| JCI | Johnson Controls | 11.12 |
| KEY | KeyCorp | 5.68 |
| KMB | Kimberly-Clark | 8.24 |
| LEG | Leggett & Platt | 9.9 |
| LLY | Lilly (Eli) | 7.83 |
| LOW | Lowe's Cos | 27.77 |
| MTB | M&T Bank | 24.22 |
| MCD | McDonald's Corp | 19.74 |
| MHP | McGraw-Hill Companies | 8.58 |
| NUE | Nucor Corp | 37.64 |
| PEP | PepsiCo Inc | 11.61 |
| PFE | Pfizer Inc | 16.44 |
| PPG | PPG Indus | 4.34 |
| PG | Procter & Gamble | 10.73 |
| PGR | Progressive Corp | 5.82 |
| STR | Questar Corp | 4.51 |
| RF | Regions Financial | 8.31 |
| ROH | Rohm & Haas | 8.3 |
| SHW | Sherwin-Williams | 12.16 |
| SIAL | Sigma-Aldrich | 13.11 |
| SLM | SLM Corp | 18.27 |
| SWK | Stanley Works | 4.48 |
| STT | State Street Corp | 13.87 |
| SVU | Supervalu Inc | 2.72 |
| SNV | Synovus Financial | 13.07 |
| TGT | Target Corp | 12.02 |
| USB | U.S. Bancorp | 12.56 |
| VFC | VF Corp | 10.65 |
| WMT | Wal-Mart Stores | 22 |
| WAG | Walgreen Co | 11.74 |
| WWY | Wrigley (Wm) Jr | 5.33 |
- Inflation rate over the 10 years through 2011 is under 3%. The list shows dividend growth outperforming inflation by a wide margin for most companies.
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- Passive Income - Part 3 - Rental Income.
- Passive Income - Part 4 - Dividends.
- Passive Income - Part 5 - Pension Plans.
- Passive Income - Part 6 - Employer Plans.
- Strategies to Beat Inflation.
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- Frugal Living - A Definition to go by.
2 comments :
First, thanks for the elaborate article on a topic I believe is key to financial freedom. However, money derived from stocks and bonds is not passive but portfolio income by the IRS standards, and thereby does not qualify for the perks allowed to passive income generators, such as capital gain tax avoidance, taxable income deductions, and the like. Your readers should be advised that it is passive income by the IRS standards that is the true key to financial freedom. That is different from income that merely arrives passively, such as is the case with a pension plan, 401 k, and other paper assett portfolios.
Hi Jamiel:
This is very true - thanks for the Insight!
Regards,
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