Eoin Treacy's view In an environment where negative real interest rates are the norm and where the S&P500 has yielded more than US Treasuries for longer than any time since the 1950s, there is understandable interest in companies with a history of reliable dividends.

The S&P500 Dividend Aristocrats Index does not have the highest yield but its constituents have been raising their dividends for at least 25 consecutive years. Many of these companies have been able to achieve this feat by developing globally diverse revenue streams and dominating their respective niches. These characteristics are attractive from an investor's perspective, subject to price action.

The S&P 500 Dividend Aristocrats Index remains in a consistent medium-term uptrend and is somewhat overbought in the short-term following an impressive rally from the November lows. While potential for some mean reversion is increasing a clear downward dynamic would be required to check momentum beyond a brief pause. The total return index has performed even more impressively.

I last posted a pdf of the constituents in Comment of the Day on October 24 th 2012. Since then Pitney Bowes has been dropped from the Index probably because it did not raise its dividend in the last quarter. Meanwhile 5 companies have been added to the Index. These are Chevron (3.04% an oil & gas major), AbbVie Inc (1.05%, Abbot Laboratories other half), Cardinal Health (2.09% in Pharmaceuticals), Pentair (1.71% in Diversified Manufacturing) and Sysco Corp (3.32% in Food Wholesale).

In October diversified manufacturers were among the most notable performers because they were breaking out of multi-year ranges and have since extended their advances. 3M, Leggett & Platt, Dover Corp, Illinois Tool Works and now Pentair have all completed decade long ranges in the last few months and can be considered to be in new secular bull markets provided they hold their respective breakouts. Industrial wholesaler WW Grainger completed an almost yearlong range in February and a sustained move below the 200-day MA would be required to question medium-term upside potential. Steel producer, Nucor, has been consolidating in the region of the upper side of its four-year base since January and found support in February near $43. A sustained move below the MA would be required to question potential for a successful upward break. Packaging manufacturer Bemis broke out to new all-time highs last month.

In the medical products sector, Becton Dickson has rallied impressively to test its 2007 peak near $90 where it has paused. A sustained move above that level would confirm a return to medium-term demand dominance. Medtronic has held a progression of higher reaction lows since August 2011 and is also in the process of completing a more than two-year consolidation. In the pharmaceuticals sector Cardinal Health is testing the upper side of an 18-month range. In the residential healthcare sector HCP found support in the region of the MA in December and continues to extend its breakout.

The food sector has becomes the subject of increased investor interest following Warren Buffett's acquisition of Heinz. Hormal Foods and McCormick are temporarily overextended while Sysco is in the process of completing a more than two-year consolidation. McDonalds has rallied to break its short-term progression of lower rally highs, having found support in the region of the $95.

In the consumer sector Johnson & Johnson completed a decade long range in December and continues to extend the breakout. Kimberly Clark and Colgate Palmolive completed their bases in 2011 and continue to rally. Clorox broke out of its base in July. While currently susceptible to mean reversion, a sustained move below the 200-day MA would be required to question medium-term upside potential. Pepsi Co is rallying back towards its 2007 peak following a lengthy period of consolidation. Proctor & Gamble broke out to new all time highs in February. Automatic Data Processing broke above its 2000 peak this week.

In the retail sector Wal-Mart found support in the region of the 200-day MA and the upper side of its decade-long range from November and a sustained move below $65 would be required to question medium-term upside potential. Target found support in the region of its MA from December and is rallying towards its 2007 peak.

In conclusion, the constituents of the S&P 500 Dividend Aristocrats Index have represented a rich seam of base formation completions over the last few years. The above 20-year charts demonstrate how many of these companies have recently broken out or are approaching the upper side of lengthy bases. As discussed earlier this week, base formation completion is a powerful continuation pattern and secular bull markets for a number of the above shares have begun. Veteran subscribers will be familiar with many of these shares from previous reviews of the Autonomies.


World Equity Index Valuations Tables - Here is the monthly list of 99 global indices ranked in descending order by dividend yield , then in ascending order by P/E, Price / Book and Price / Cash Flow.

The Hong Kong Hang Seng China Enterprises Index was a clear standout this month with a P/E of 8 and dividend yield of 3.76%. It posted a downside weekly key reversal in early February, from the 12,000 area, and has pulled back to test the region of the 200-day MA where it has firmed. A sustained move below 11,000 would be required to question potential for an additional bounce from this area.

(Please note: All data quoted above originates in Bloomberg. We realise that some of the data displayed is inaccurate for some indices, particularly where ADRs are included. However, I have endeavoured to remove those indices which were most problematic. We continue to publish these tables because the data is generally accurate and going forward we will continue to weed-out the less reliable data sets as subscribers highlight them for us. The P/Es quoted by Bloomberg are exclusively based on operating earnings.)