Foreword
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 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 V.F. Corporation (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.
Four more in the top ten, 3M Company (MMM), Federal Realty Investment Trust (FRT), T. Rowe Price Group (TROW), and Chevron Corp (CVX) could soon join the ideal four.
As we are now over 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 15.08% To 19.8% Top Gains To May 2025
Four 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 May 3 forecast for Aristocrats (as graded by Brokers) was 40% 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 May 3, 2025, were:
Kenvue Inc was projected to net $198.37, based on the median of target price estimates from 14 analysts, plus dividends, less broker fees. A Beta number was not available for KVUE.
J.M. Smucker Co (SJM) net $194.51, 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 77% less than the market as a whole.
Target Corp (TGT) was projected to net $184.59 based on the median of target price estimates from 29 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 17% over the market as a whole.
Medtronic plc (MDT) netted $184.28 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 17% over the market as a whole.
Johnson & Johnson netted $184.18 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 45% under the market as a whole.
Chevron Corp was projected to net $173.29, based on the median of target price estimates from 23 analysts, plus the estimated annual dividend, less broker fees. The Beta number showed this estimate subject to risk/volatility 11% over the market as a whole.
Exxon Mobil Corp (XOM) was projected to net $163.31, based on dividends, plus the median of target price estimates from 22 analysts, less broker fees. The Beta number showed this estimate subject to risk/volatility 4% under the market as a whole
Sysco Corp (SYY) was projected to net $160.94, based on a median of target estimates from 14 analysts, plus dividends, less broker fees. The Beta number showed this estimate subject to risk/volatility 16% over the market as a whole.
Federal Realty Investment Trust was projected to net $156.12 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 2-% greater than the market as a whole.
Franklin Resources Inc was projected to net $150.78 based on target price estimates from 12 analysts, plus annual dividend, less broker fees. The Beta number showed this estimate is subject to risk/volatility 44% over the market as a whole.
The average net gain in dividend and price was estimated to be 17.5% on $10k invested as $1k in each of these ten stocks. The average Beta ranking showed these estimates subject to risk/volatility 16% 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 May Dogs of The Dividend Aristocrats
Top ten Aristocrat Dogs selected 5/3/24 by yield represented seven of eleven Morningstar sectors. First place went to one industrial representative, 3M Co [1].
Then three real estate representatives took the second, sixth, and tenth slots, Realty Income Corp [2], Federal Realty Investment Trust [6], and Essex Property Trust, Inc. (ESS) [10].
Following, in third, was the first of two financial services sector Aristocrats, Franklin Resources Inc [3], and T. Rowe Price Group Inc [5].
In fourth place was the lone materials sector member, Amcor PLC [4]. The seventh place went to the consumer defensive representative, Kenvue Inc [7].
A lone energy representative placed eighth, Chevron Corporation [8]. Finally, the lone technology representatives in the top ten, placed ninth, International business Machines Corp (IBM)[9], to complete the May S&P500 Dividend Aristocrats top-ten, by yield.
Actionable Conclusions: (21-30) Ten Aristocrats Showed 11.3% To 16.7% Upsides To May 2025; (31). Four -0.001% to -9.87% 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 13.53% Advantage For 5 Highest-Yield, Lowest-Priced, of Top Ten Dividend Aristocrats To May 2025
Ten top Aristocrats were culled by (dividend/price) yield results for this monthly update.
As noted above, top ten Aristocrats by yield selected 5/3/24 represented seven of eleven sectors in the Morningstar sector scheme.
Actionable Conclusions: Analysts Estimated 5 Lowest-Priced Of Ten Highest-Yield Dividend Aristocrats (32) Delivering 14.2% Vs. (33) 12.5% Net Gains by All Ten, Come May 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 13.53% more gain than $5,000 invested as $.5k in all ten. The second lowest-priced Aristocrat top-yield stock, Kenvue Inc, was projected by analysts to deliver the best net gain of 19.84%.
The five lowest-priced top-yield Aristocrats as of May 3 were: Amcor plc; Kenvue Inc; Franklin Resources; Realty Income Corp; 3M Co, with prices ranging from $10.01 to $97.15
The five higher-priced top-yield Aristocrats as of May 3 were: Federal Realty Investment Trust; T. Rowe Price; Chevron Corp; International Business Machines; Essex Property Trust Inc, whose prices ranged from $102.01 to $250.31.
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 5/3/24) 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 Co to plunge $19.42 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.
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