Shares of companies that have consistently increased dividends have performed better in the bear market this year.
Below is a screen showing which stocks among the extended list of Dividend Aristocrats are analysts’ favorites for the coming year. This is followed by a list of Aristocrats with the highest dividends.
First, let’s define this group of stocks.
Saving as interest rates rise
S&P 500 Dividend Aristocrats Index XX:SP50DIV
The S&P 500 SPX benchmark comprises 63 stocks
which have collected regular dividends for at least 25 consecutive years. That’s the only requirement – it doesn’t matter how high or low a stock’s current yield is. The index is equal-weighted and tracked by the ProShares S&P 500 Dividend Aristocrats ETF NOBL..
Here’s how the S&P 500 Dividend Aristocrats Index has performed with dividends reinvested against the S&P 500 this year through December 2:
A collection of facts
Investors have taken comfort in Aristocrats during this year’s broad slide for stocks. But the high performance is also reflected in the long-term returns of the indices:
| index | 3 years | 5 years | 10 years | 15 years | 20 years | 25 years | 30 years |
|
S&P 500 Dividend Aristocrats |
11.5% |
11.4% |
13.4% |
11.5% |
11.5% |
10.2% |
11.45% |
|
S&P 500 |
11.2% |
11.0% |
13.3% |
9.2% |
9.8% |
7.9% |
9.91% |
|
Source: FactSet |
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The S&P 500 Dividend Aristocrats Index has outperformed the S&P 500 for all periods on the chart. But it has shown its greatest advantage over periods of 15 years or longer, leading to the 2008-2009 financial crisis and/or the reversal of the dot-com bubble in the two years to October 2002.
Investing in NOBL is an easy way to ride with this group, but you may also be interested in individual aristocrats for long-term growth or income investments.
Analysts’ favorite Dividend Aristocrats for 2023
For a broad screen of Dividend Aristocrat stocks, we expanded our pool of companies by looking at two other Aristocrat indexes maintained by S&P Dow Jones Indices:
-
The S&P 400 Dividend Aristocrats Index has 45 company stocks that have raised dividends for at least 15 consecutive years, taken from the full S&P Mid Cap 400 Index MID..
ProShares S&P MidCap 400 Dividend Aristocrats ETF is tracked by REGL.. -
S&P High Yield Dividend Aristocrats Index XX: SPHYDA
The S&P Composite 1500 Index consists of 119 stocks in XX:SP1500
which has increased dividends for at least 20 consecutive years. The SPDR S&P Dividend ETF is tracked by SDY.
The S&P Composite 1500 itself consists of the S&P 500, the S&P Mid Cap 400 and the S&P 600 Small Cap Index SML..
Thus, the S&P High Yield Dividend Aristocrats Index contains all the stocks in the S&P 500 Dividend Aristocrats Index. But some in the S&P 400 Dividend Aristocrats Index are exceptions. The name of the High Yield Dividend Aristocrats Index is misleading because the yields aren’t necessarily high – they range from 0.31% to 6.91%.
All together, excluding duplicates, there are 134 companies in the three Dividend Aristocrats indexes.
We’ve narrowed the list down to 119, which includes at least five analysts polled by FactSet to check enthusiasm among analysts working at brokerage firms.
Among the 119 Dividend Aristocrats, 10 have “buy” or equivalent ratings, based on consensus estimates, and at least 10% 12-month upside potential:
| Company | Ticker | Share “Buy” ratings | December 2 closing price | Consensus price target | It implies 12 months of upside potential | Dividend income |
|
Perrigo Co. Plc |
PRGO |
100% |
$31.94 |
$49.25 |
54% |
3.26% |
|
Carlisle Cos. Inc. |
CSL |
75% |
$259.73 |
$348.33 |
34% |
1.16% |
|
Regal Rexnord Corp. |
RRX |
86% |
$126.00 |
$159.57 |
27% |
1.11% |
|
ABM Industries Inc. |
ABM |
86% |
$46.29 |
$58.00 |
25% |
1.69% |
|
L3Harris Technologies Inc. |
LHX |
52% |
$230.00 |
$269.37 |
17% |
1.95% |
|
Albemarle Corp. |
ALB |
56% |
$284.28 |
$317.49 |
12% |
0.56% |
|
Lowe’s Cos. Inc. |
DOWN |
56% |
$214.84 |
$239.87 |
12% |
1.95% |
|
Essential Utilities Inc. |
WTRG |
64% |
$48.32 |
$53.56 |
11% |
2.38% |
|
Exxon Mobil Corp. |
RAW |
56% |
$109.86 |
$120.59 |
10% |
3.31% |
|
NextEra Energy Inc. |
NO |
70% |
$85.20 |
$93.43 |
10% |
2.00% |
|
Source: FactSet |
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None of the dividend yields on the list are particularly high.
Some investors prefer high dividend yields to current income. Going back to the full list of 134 companies in the three Dividend Aristocrat indexes, these are the 10 companies with the highest dividend yields:
| Company | Ticker | Dividend income | Share “Buy” ratings |
|
Telephone and Information Systems Inc. |
TDS |
6.91% |
20% |
|
VF Corp. |
VFC |
6.14% |
33% |
|
Leggett & Platt Inc. |
LEG |
4.98% |
25% |
|
National Retail Properties Inc. |
NNN |
4.76% |
40% |
|
Realty Income Corp. |
He |
4.73% |
50% |
|
3M Co. |
MMM |
4.69% |
5% |
|
Walgreens Boots Alliance Inc. |
WBA |
4.63% |
17% |
|
International Business Machines Corp. |
IBM |
4.44% |
33% |
|
Northwestern Corp. |
NWE |
4.33% |
33% |
|
Franklin Resources Inc. |
BEN |
4.26% |
0% |
|
Source: FactSet |
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A high dividend yield may be important if you want current income, but it doesn’t correlate with strong long-term total returns.
None of the stocks on this second list of the highest-yielding Aristocrats have “buy” or equivalent ratings, so price targets are not included in the table.
But you can click on the icons for more information about any company or index in this article.
You should also read Tommy Kilgore’s detailed guide to information wealth for free on the MarketWatch quote page.
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