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As a supplement to this article, please note that Kiplinger has published an on-line slide-show detailing the latest 2024 S&P Dividend Aristocrats. The article, entitled Best Dividend Stocks for Dependable Dividend Growth, is by Dan Burrows, a contributing editor.
S&P Dow Jones Indices rebalances the S&P 500 Dividend Aristocrats every January, the Aristocratic population now stands at 67.
There were two changes to the Dividend Aristocrats announced in January 2024. Walgreens Boots Alliance (WBA) was removed from the index after the pharmacy chain slashed its dividend by almost half in late 2023. WBA had raised its dividend annually without fail for almost a half-century before the cut.
At the same time, industrials supplier Fastenal (FAST) was added to the Dividend Aristocrats in recognition of its quarter-century streak of annual dividend hikes.
Other changes to the Dividend Aristocrats over the past year include the removal of V.F. Corp. (VFC) and the addition of Kenvue (KVUE), which was spun off from fellow Aristocrat Johnson & Johnson (JNJ).
The Dividend Aristocrats have been among the best dividend stocks for income growth over the past few decades, and they're a great place to start if you're looking to add dividend battleships to your long-term portfolio.
Nevertheless, most of this collection of 67 S&P 500 Dividend Aristocrats are too pricey to justify their skinny dividends. The consequence of stock market popularity (measured by stock price) is skinny dividends. The contrarian approach finds the top dogs by looking for high dividends. This month, four of the top ten and one outside the ten highest-yield Aristocrats, live up to the dogcatcher ideal. That is, they pay annual dividends (from $1K invested) exceeding their single share prices.
Four in the top ten are: Realty Income Corp. (O), Amcor plc (AMCR); Franklin Resources Inc. (BEN) & Kenvue Inc. A lone ideal outsider is Hormel Foods (HRL).
Six more in the top ten, 3M Co. (MMM), T. Rowe Price Group (TROW), Federal Realty Investment Trust (FRT), Chevron Corp. (CVX), Essex Property Trust (ESS), and Kimberly-Clark (KMB), could soon join the ideal four. MMM was just $14.91 off the mark as of 3/6/24.
As we are now near four years, past the 2020 Ides of March dip, the time to snap-up those five lingering top yield Aristocrat dogs is at hand... Of course, when another big bearish drop in price happens, your strategy would be to add to your position in any of those you then hold.
Five of the ten top Aristocrats by yield were also verified as being among the top ten gainers for the coming year based on analyst 1-year target prices. (They are tinted gray in the chart below.) Thus, this yield-based March 6 forecast for Aristocrats (as graded by Brokers) was 50% accurate.
Estimated dividend-returns from $1000 invested in each of these highest-yielding stocks and their aggregate one-year analyst-median-target-prices, as reported by YCharts, produced the 2024-25 data -points for the projections below. (Note: target-prices from less-than two analysts were not used.) Ten probable profit-generating trades projected to March 6, 2025 were:
Source: YCharts.com
Archer-Daniels-Midland (ADM) was projected to net $276.67 based on dividends, plus the median of target price estimates from 14 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 25% less than the market as a whole.
NextEra Energy (NEE) was projected to net $256.82, based on a median of target estimates from 18 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 50% under the market as a whole.
Realty Income was projected to net $245.30 based on the median of target price estimates from 15 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 8% under the market as a whole.
Chevron netted $227.95 based on a median target price estimate from 25 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 12% over the market as a whole.
3M Co. was projected to net $223.09, based on dividends, plus the median of target price estimates from 17 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 1% over the market as a whole
Exxon Mobil (XOM) netted $184.94 based on a median target price estimate from 24 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 4% under the market as a whole.
Kenvue was projected to net $181.92, based on the median of target price estimates from 14 analysts, plus dividends, less broker fees. A Beta number was not available for KVUE.
PepsiCo Inc. (PEP) was projected to net $168.85 based on target price estimates from 23 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 47% under the market as a whole.
Amcor plc was projected to net $168.37, based on the median of target price estimates from 10 analysts, plus the estimated annual dividend, less broker fees. A Beta number was not available for AMCR.
J. M. Smucker Co. (SJM) net $159.33, based on dividends, plus the median of target price estimates from 17 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 79% less than the market as a whole.
The average net gain in dividend and price was estimated to be 20.93% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 40% less than the market as a whole.
Source: Open source dog art from dividenddogcatcher.com
Stocks earned the "dog" moniker by exhibiting three traits: (1) paying reliable, repeating dividends, (2) their prices fell to where (3) yield (dividend/price) grew higher than their peers. Thus, the highest yielding stocks in any collection became known as "dogs." More precisely, these are, in fact, best called, "underdogs", even if they are "Aristocrats."
Sources: us.spindices/YCharts.com
This scale of broker-estimated upside (or downside) for stock prices provides a measure of market popularity. Note: no broker coverage or single broker coverage produced a zero score on the above scale. These broker estimates can be seen as the emotional component (as opposed to the strictly monetary and objective dividend/price yield-driven report below). As noted above, these scores may also be regarded as contrarian.
Sources: us.spindices/YCharts.com
Top ten Aristocrat Dogs selected 3/6/24 by yield represented six of eleven Morningstar sectors. First place went to one industrials representative, 3M [1].
Then three real estate representatives took the second, sixth, and eighth slots, Realty Income [2], Federal Realty Investment Trust [6], and Essex Property Trust [8].
Following, in third, was the lone consumer cyclical representative, Amcor plc [3]. Then in fourth and seventh places, were two financial services sector Aristocrats, Franklin Resources [4], and T. Rowe Price Group [7].
A lone energy representative placed fifth, Chevron [5]. Finally, two consumer defensive representatives in the top ten, placed ninth and tenth, Kenvue [9], and Kimberly-Clark [10], to complete the March S&P 500 Dividend Aristocrats top-ten, by yield.
Source: YCharts.com
To quantify top-yield rankings, analyst median-price target estimates provided a "market sentiment" measure of upside potential. Added to the simple high-yield metrics, analyst median price-target-estimates became another tool to dig-out bargains, (or unrealistic expectations).
Ten top Aristocrats were culled by (dividend/price) yield results for this monthly update.
Source: YCharts.com
As noted above, top ten Aristocrats by yield selected 3/6/24 represented six of eleven sectors in the Morningstar sector scheme.
Source: YCharts.com
$5000 invested as $1k in each of the five lowest-priced stocks in the top ten Dividend Aristocrats kennel by yield was predicted (by analyst 1-year targets) to deliver 37.19% more gain than $5,000 invested as $.5k in all ten. The fourth lowest-priced Aristocrat top-yield stock, Realty Income, was projected by analysts to deliver the best net gain of 24.53%.
Source: YCharts.com
The five lowest-priced top-yield Aristocrats as of March 6 were: Amcor plc; Kenvue; Franklin Resources; Realty Income; 3M, with prices ranging from $9.42 to $92.62
The five higher-priced top-yield Aristocrats as of March 6 were: Federal Realty Investment Trust; T. Rowe Price; Kimberly-Clark; Chevron; Essex Property Trust, whose prices ranged from $101.99 to $242.50.
This distinction between five low-priced dividend dogs and the general field of ten reflected Michael B. O'Higgins' "basic method" for beating the Dow. The scale of projected gains based on analyst targets added a unique element of "market sentiment" gauging upside potential. It provided a here-and-now equivalent of waiting a year to find out what might happen in the market. Caution is advised, however, since analysts are historically only 15% to 85% accurate on the direction of change and just 0% to 15% accurate on the degree of change.
If somehow you missed the suggestion of the five stocks ripe for picking at the start of the article, here is a repeat of the list at the end:
The following 5 (as of 3/6/24) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Amcor plc; Kenvue; Franklin Resources; Realty Income; Hormel Foods. Watch for 3M to plunge $14.91 to become ideal in the next six months.
Source: YCharts.com
Since four of the top ten Aristocrats shares are now priced less than the annual dividends paid out from a $1K investment, the following charts compare those four plus six at current prices. The dollar and percentage differences between recent and fair prices are documented in the top chart. Recent pricing is shown in the middle chart. Fair pricing, when all ten top dogs conform to the ideal, is displayed in the bottom chart.
Sources: S&P Dow Jones Indices & Kiplinger.com
Note that the number of years of dividend increases for these 67 Aristocrats are documented in the far right column on the chart above.
The net gain/loss estimates in the article above did not factor-in any foreign or domestic tax problems resulting from distributions. Consult your tax advisor regarding the source and consequences of "dividends" from any investment.
Stocks listed above were suggested only as possible reference points for your Dividend Aristocrats dog stock purchase or sale research process. These were not recommendations.
Disclaimer: This article is for informational and educational purposes only and should not be construed to constitute investment advice. Nothing contained herein shall constitute a solicitation, recommendation or endorsement to buy or sell any security. Prices and returns on equities in this article except as noted are listed without consideration of fees, commissions, taxes, penalties, or interest payable due to purchasing, holding, or selling same.
Graphs and charts were compiled by Rydlun & Co., LLC from data derived from www.indexarb.com; YCharts.com; Yahoo Finance - Stock Market Live, Quotes, Business & Finance News; analyst mean target price by YCharts. Dog art: Open source dog art from Dividend Dog Catcher.
Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.