It is certainly not news that both the Dow Jones Industrial Average (NYSE: DIA) and the Standard & Poor’s 500 Index (NYSE: SPY) are off in recent market action. There could be even more declines ahead: no one knows for sure, that is to be true. What is known is the dividend history of Dividend Aristocrats such as Illinois Tool Works (NYSE: ITW) and Sherwin Williams (NYSE: SHW). These companies became known as Dividend Aristocrats by increasing the amount of the dividend paid to shareholders annually for over 25 yeas.
There is every reason to expect this to continue into the future.
The act of paying a dividend is a sign of strength for a publicly traded company. To increase it is another powerful statement about how well the business model is functioning. For the amount of the dividend to be raised annually for more than 25 years is a testament to the financial stability of that company. Obviously that is very attractive to income investors in periods when the Dow Jones Industrial Average is falling (chart below).
It also shows respect for all of the shareholders.
Dividends are paid to all who own the stock. Even if it is just one share, that person gets the amount as a major pension fund or hedge fund, or other institutional investor. Minority shareholders are treated well by the management of the company when it comes to paying and increasing the amount of the dividend.
Like so many other Dividend Aristocrats, Sherwin Williams, and Illinois Tool Works are excellent companies.
Sherwin Williams produces paints, solvents, and other building materials. Illinois Tool Works is an industrial conglomerate. Long term investors have done very well in owning the shares of Illinois Tool Works and Sherwin Williams. With a history of increasing the dividend each year, that should continue into the future.