When you're looking at dividend stocks, one of the first criteria you want to look at is a stock's dividend history. One of the hardest things for a company to do is to maintain stable dividends. Think about it: With most industries going through cyclical ups and downs that have a direct impact on their income and available cash flow, it can be challenging for a company to make sure it always has the cash on hand to pay its shareholders. From the market meltdown back in 2008 and early 2009, we know all too well how easy it is for seemingly solid dividend payers to have to reverse course and reduce or eliminate their payouts due to financial difficulties.
So if merely sustaining a dividend payout over the decades is hard, think how much harder it is to consistently increase those dividends year in and year out. Through good times and bad, finding more money every year to pay investors is something that few companies have managed to achieve, even among the largest, most successful stocks in the entire market. But a handful of companies have managed to put together impressive track records. Those that are in the S&P 500 index and have increased their dividends every year for at least 25 years qualify as Dividend Aristocrats under S&P's definition.
Source: Motley Fool
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