4 Dividend Aristocrats Signal Buy In April Plus 6 To Watch

Foreword

As supplement to this article, please note that Kiplinger has published an online slide-show detailing the latest 2024 S&P Dividend Aristocrats. The article, entitled The S&P 500 Dividend Aristocrats, 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 VF 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, the 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.

Five more in the top ten, 3M Co (MMM), Federal Realty Investment Trust (FRT), T. Rowe Price Group (TROW), Kimberly Clark (KMB), and Chevron Corp (CVX) could soon join the ideal four. Outside the top ten, Hormel Foods (HRL) was just $2.23 off the mark as of 4/3/24.

As we are now four-years past the 2020 Ides of March dip, the time to snap-up those four 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.

Actionable Conclusions (1-10): Analysts Predict 13.4% To 21.57% Top Gains To April 2025

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 April 3 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 April 3, 2025 were:

Realty Income Corp was projected to net $215.73 based on the median of target price estimates from 16 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 8% under the market as a whole.

Amcor PLC was projected to net $199.18, 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.

Federal Realty Investment Trust was projected to net $176.07 based on dividends, plus the median of target price estimates from 18 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 21% greater than the market as a whole.

3M Co was projected to net $163.29, 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 2% over the market as a whole

Johnson & Johnson netted $157.94 based on a median target price estimate from 21 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 47% under the market as a whole.

Kenvue Inc was projected to net $150.24, based on the median of target price estimates from 14 analysts, plus dividends, less broker fees. A Beta number was not available for KVUE.

Next Era Energy Inc (NEE) was projected to net $140.41, based on a median of target estimates from 19 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 49% under the market as a whole.

JM Smucker Co (SJM) net $138.28, based on dividends, plus the median of target price estimates from 18 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 79% less than the market as a whole.

Medtronic PLC (MDT) netted $134.26 based on a median target price estimate from 28 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 22% under the market as a whole.

Air Products & Chemicals Inc (APD) was projected to net $134.07 based on target price estimates from 22 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 19% under the market as a whole.

The average net gain in dividend and price was estimated to be 16.1% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 41% less than the market as a whole.

The Dividend Dogs Rule

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.”

Top 50 Dividend Aristocrats By Broker Targets

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.

Top 50 Dividend Aristocrats By Yield

Actionable Conclusions (11-20): Ten Top Stocks By Yield Are The March Dogs of The Dividend Aristocrats

Top ten Aristocrat Dogs selected 3/6/24 by yield represented six of eleven Morningstar sectors. First place went to one industrials representative, 3M Co [1].

Then three real estate representatives took the second, sixth, and eighth slots, Realty Income Corp [2], Federal Realty Investment Trust (FRT) [6], and Essex Property Trust Inc (ESS) [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 Inc [4], and T. Rowe Price Group Inc [7].

A lone energy representative placed fifth, Chevron Corporation [5]. Finally two consumer defensive representatives in the top ten, placed ninth and tenth, Kenvue Inc [9], and Kimberly Clark Corp [10], to complete the March S&P500 Dividend Aristocrats top-ten, by yield.

Actionable Conclusions: (21-30) Ten Aristocrats Showed 10.85% To 16.73% Upsides To April 2025; (31). Four -0.04% to -10.88% Downside Dogs Descended

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).

Analysts Estimated A 33.62% Advantage For 5 Highest-Yield, Lowest-Priced, of Top Ten Dividend Aristocrats To April, 2025

Ten top Aristocrats were culled by (dividend/price) yield results for this monthly update.

As noted above, top ten Aristocrats by yield selected 4/3/24 represented six of eleven sectors in the Morningstar sector scheme.

Actionable Conclusions: Analysts Estimated 5 Lowest-Priced Of Ten Highest-Yield Dividend Aristocrats (32) Delivering 15.83% Vs. (33) 11.85% Net Gains by All Ten, Come April, 2025

$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 33.62% more gain than $5,000 invested as $.5k in all ten. The third lowest-priced Aristocrat top-yield stock, Franklin Resources Inc., was projected by analysts to deliver the best net gain of 21.57%.

The five lowest-priced top-yield Aristocrats as of April 3 were: Amcor PLC; Kenvue Inc; Franklin Resources; Realty Income Corp; 3M Co, with prices ranging from $9.18 to $93.19

The five higher-priced top-yield Aristocrats as of April 3 were: Federal Realty Investment Trust; T. Rowe Price; Kimberly-Clark Corp; Chevron Corp; Essex Property Trust Inc, whose prices ranged from $100.16 to $237.50.

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.

Afterword

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 4 (as of 4/3/24) realized the ideal of offering annual dividends from a $1K investment exceeding their single share prices: Amcor PLC; Kenvue Inc; Franklin Resources Inc; Realty Income Corp.

Watch for 3M Company to plunge $15.48 to become ideal in the next six months.

Price Drops or Dividend Increases Could Get All Ten Top Aristocrat Dogs Back to “Fair Price” Rates For Investors

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.

S&P500 Aristocrats Alphabetically by Ticker Symbol

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.