Dividend Aristocrats ex-Tobacco 25
The 25-year dividend-growth list with tobacco names dropped and the savings redistributed by FCF coverage, not yield.
Why it won
Most aristocrats screens reward the highest yielders, which means tobacco crowds the top. Removing it and re-weighting by free-cash-flow coverage of the dividend produces a cleaner long-duration income stream with less terminal risk. The income drag is real but small, the duration profile is much better.
The prompt
S&P 500 Dividend Aristocrats but exclude tobacco entirely. 25 names, weighted by trailing free cash flow coverage of the dividend, with a 7% per-name cap. Rebalance once a year.
Methodology
- Universe: S&P 500 constituents with 25 or more consecutive years of dividend increases.
- Exclusion: GICS Tobacco sub-industry removed entirely.
- Quality filter: trailing 12m FCF must cover the dividend at least 1.5x.
- Weight by FCF dividend coverage ratio, capped at 7% per name.
- Annual rebalance in January, no intra-year additions.
Backtest
Figures are illustrative for editorial purposes. Past performance does not guarantee future results.
Holdings
| Ticker | Name | Weight |
|---|---|---|
| JNJ | Johnson & Johnson | 7.0% |
| PG | Procter & Gamble | 7.0% |
| KO | Coca-Cola | 6.0% |
| PEP | PepsiCo | 6.0% |
| WMT | Walmart | 6.0% |
| MCD | McDonald's | 5.0% |
| CL | Colgate-Palmolive | 5.0% |
| GWW | W W Grainger | 5.0% |
| EMR | Emerson Electric | 4.0% |
| ITW | Illinois Tool Works | 5.0% |
| ADP | Automatic Data Processing | 5.0% |
| MMM | 3M Company | 3.0% |
| TROW | T Rowe Price | 4.0% |
| GD | General Dynamics | 4.0% |
| TGT | Target | 3.0% |
| SHW | Sherwin-Williams | 4.0% |
| ABT | Abbott Laboratories | 4.0% |
| MDT | Medtronic | 3.0% |
| SYY | Sysco Corporation | 3.0% |
| BDX | Becton Dickinson | 3.0% |
| CINF | Cincinnati Financial | 2.0% |
| AFL | Aflac | 3.0% |
| ECL | Ecolab | 3.0% |
Risks
- Defensive consumer and healthcare names underperform in sharp risk-on rallies.
- Dividend-coverage weighting penalises high-growth, low-payout aristocrats that would have delivered more total return.
- Removing tobacco gives up 60 to 80bps of headline yield versus the unfiltered list.
Earlier weeks
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