Top Dividend Aristocrat Stocks in 2010

We are near the midpoint of 2010 and despite big swings in the markets, the overall stock market indexes are pretty much where they were at the start of the year. The Dow Jones index is up just a fraction of a percentage, while the S&P 500 is down a fraction.

 

Fortunately, dividend investors have been outperforming the market in 2010. On average, dividend aristocrat stocks (companies that have increased their dividend payments for at least 25 consecutive years) have seen their stock price rise 3% this year. When you include dividend payments the return jumps to nearly 5%.

 

Studies have shown that dividends account for approximately 40% of total market returns. Smart investors look to capitalize on both dividend checks and share price gains. One of the best places to look for quality dividend stocks is among the list of dividend aristocrat stocks.

 

Here is a look at the top performing dividend aristocrat stocks in 2010:

 

Family Dollar Stores

The deep discount retailer only yields 1.6%, but has seen their stock price climb over 40% in 2010. The stock was also one of the top performers during the depths of the recession, gaining 36% in 2008 while the S&P 500 plunged over 38%.

 

FDO increased their dividend by 15% in January, but Wall Street is expecting earnings to grow by 25% in fiscal 2010. With such strong earnings growth expected, Family Dollar Stores will likely only pay out 25% of their earnings this year. This should setup another nice dividend increase next year.

 

Sherwin-Williams

Another stock that posted positive returns during the recent recession is Sherwin-Williams. SHW shares gained 3% in 2008, which easily outperformed the 34% decline in the Dow Jones index. The paint manufacturer has seen their shares climb 25% in 2010, pushing their dividend yield down to 1.9%.

 

In February, SHW boosted their quarterly dividend by 1.3%. While the dividend increase was modest, it did mark the 31st consecutive year that the company has increased their dividend payout. With earnings expected to grow by 18% this year, investors may see a more significant dividend increase in 2011.

 

Questar

Questar has seen their stock price rise in recent days as the Obama administration has spoken positively about natural gas in the wake of the Gulf of Mexico drilling disaster. STR shares are up 18% since the beginning of the year, but they have gained nearly 10% in June alone.

 

At 1.1%, Questar does offer one of the smallest yields of any of the dividend aristocrat stocks. However, investors are expecting another dividend increase this fall. The company has a track record of increasing their dividend payments each of the past 29 years.

 

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