Many investors prefer dividend stocks, especially when the market is in turbulence, and high-yield stocks have become a safe haven for capital because they can earn stable cash flow.

However, it is important to note that a high dividend rate does not necessarily mean a high investment value. One reason is that the dividend rate is the dividend divided by the stock price, and the dividend rate of a stock will rise as the stock price falls. Also, a one-time special dividend would also boost the dividend rate, but this obviously won't continue every year.

Therefore, when investing in high-yield stocks, the key depends on long-term dividend records. If a company continues to increase its dividends over the years, this kind of high-yield stock is naturally more attractive.

To select such high-quality dividend stocks, you can use the “dividend nobility” standard as a reference, that is, stocks that can continue to pay dividends every year and the dividends increase every year.

The S&P Dividend Noble Index series mainly tracks companies whose dividends have continued to grow every year over a period of time. The series includes the S&P 500 Dividend Aristocrats (S&P 500 Dividend Aristocrats), S&P Global Dividend Aristocrats (S&P Global Dividend Aristocrats Index), and the S&P High Yield Dividend Aristocrats Index (S&P High Yield Dividend Aristocrats Index).

Take the S&P 500 Dividend Aristocrats Index as an example. Every year, the US S&P Dow Jones Index Company will select “dividend aristocrats” for US stocks according to the following four conditions, including:

• Must be a component of the S&P 500 index;

• increase dividends for at least 25 consecutive years;

• The market value in circulation is greater than 3 billion US dollars;

• The average daily turnover is at least $5 million.

If a company doesn't increase dividends or is removed from the S&P 500 index, the company may be removed from the S&P 500 dividend nobility index. The index is adjusted quarterly in January, April, July, and October.

Compared with the constituent stocks in the S&P 500 index, the various stocks in the dividend nobility index provide higher risk-adjusted returns and better downside protection. Although investment returns are often value-oriented, “dividend aristocrats” are characterized by both growth and value. Since 1999, the index has averaged 57.55% of value exposure and 42.44% of growth exposure.

According to data compiled by Sure Dividend, as of April 2022, S&P 500 dividend aristocrats comprised 66 constituent stocks distributed across 10 industries, including essential consumption (21.5%), industry (19.2%), finance (12.6%), materials (12.2%), healthcare (11.4%), optional consumption (7.2%), utilities (4.9%), real estate (4.5%), energy (3.5%), and information technology (3%).

The downside is that in terms of 3, 5, and 10 years, the S&P Dividend Noble Index performed slightly worse than the S&P 500 Index, but this year the situation was reversed. Since the beginning of the year, the S&P 500 Index has declined by 12.99%. The S&P 500 Dividend Aristocrat Index, the S&P Global Dividend Aristocrat Index, and the S&P High Yield Dividend Aristocrat Index have earned -6.38%, -3.49%, and -3.02% respectively, all better than the S&P 500 Index.

As far as individual stocks are concerned, the S&P 500 dividend nobility index constituents have had mixed performance since this year. Of the 66 individual stocks, 44 have outperformed the S&P 500 index, accounting for 66.7%. Among them, the best-performing constituent stocks are$ExxonMobil (XOM.US) $,$Chevron (CVX.US) $,$Archer Daniels Midland (ADM.US) $,$Nucor Steel (NUE.US) $etc., the stock price has recorded an increase of more than 20% since the beginning of the year. Furthermore,$ Coca-Cola (KO.US) $An increase of nearly 10%,$Walmart (WMT.US) $An increase of more than 6%.

Tim Bain (Tim Bain), president and chief investment officer of Spark Asset Management, said that in terms of yield quality and leverage ratio, companies that can continuously increase their dividends are often of higher quality compared to the general market. A company's ability to reliably increase its dividends for years or even decades is an indication of its strong financial position.