If you do not have the same enthusiasm for dividend income, then you should be. It is a potent tool for long-term wealth compounding. Think of it as a passive income while you invest in stocks. However, not everyone is aware of a set of stocks the that routinely pay dividends in a better and more precise manner than other businesses. They are known as Dividend Aristocrats stocks.
What Does Dividend Aristocrat Means?
An S&P500 stock that has increased its dividend every year for at least 25 years is considered a dividend aristocrat.
A corporation increases dividend payout per share in dollars by raising its dividend. The dividend yields of the dividend aristocrats don’t always need to rise over time.
Health care, consumer goods, finance, manufacturing, and other sectors have their share of Dividend Aristocrats.
They do, however, share a few characteristics. The company first needs to establish to satisfy the 25-year dividend-raiser requirement. The company must have been publicly-traded for at least 25 years. The dividend aristocrats do not include any recent entrants to the stock market, such as Tesla.
Second, they are all large-cap stocks. They must be S&P 500 firms to qualify as dividend aristocrats. And to be included in the S&P 500 companies, they must have a market capitalization of at least $13.1 billion.
Top 5 Dividend Aristocrats Stocks Based On Research
These rankings are the total return for the next five years’ predictions from the Sure Analysis Research Database.
Top 5: Pentair (Stock Code: PNR)
The Aquatic Systems, Filtration Solutions, and Flow Technologies sectors make up Pentair PLC, a pure-play provider of water solutions. And if we consider the spin-offs, Pentair has increased its dividend for more than 40 years straight since 1966.
The projected total returns of Pentair will reach 13.9% over the next five years.
Top 4: Lowe’s Companies (Stock Code: LOW)
The second-largest home improvement retailer in the US is Lowe’s Companies Inc. (after Home Depot). About 2,200 home improvement and hardware stores are operated or serviced by Lowe’s, founded in 1946, and have their headquarters in Mooresville, North Carolina.
The company still has $1.5 billion in cash and cash equivalents, which puts it in a healthy liquidity position. The business reiterated its fiscal 2022 guidance and to generate diluted earnings per share (EPS) in the range of $13.10 to $13.60 on total revenues of about $98 billion. In 2022, Lowe plans to buy back common shares worth $12 billion.
Top 3: Albemarle Corporation (Stock Code: ALB)
The world’s largest producer of lithium and the second-largest producer of bromine, respectively, is Albemarle Corporation (ALB). Approximately two-thirds of all sales each year are made up of these two products. Albemarle mines lithium from salt brine reserves in Chile and the United States. Two joint ventures the corporation has in Australia also produce lithium. Anyone can get cheap lithium from Albemarle’s Chilean properties.
Through 2027, there is an expectation of a 7.5% increase in the annual EPS growth. Additionally, the stock currently offers a 0.6% dividend yield despite being undervalued. Over the following five years, the projected total returns are at a 14.3% annual rate.
Top 2: 3M Company (Stock Code: MMM)
There are more than 60,000 different types of 3M products used in homes, hospitals, corporate buildings, and schools worldwide. And 3M has nearly 95,000 employees in more than 200 countries worldwide.
Expect 3M stock to return 15.1% annually, powered by the 5% predicted EPS growth, the 5% dividend yield, and a boost of about 5.1% from rising P/E multiples.
Top 1: VF Corporation (Stock Code: VFC)
V.F. Corporation (VFC) is one of the largest clothing, accessory, and footwear manufacturers worldwide. The North Face, Vans, Timberland, and Dickies are just a few of the company’s brands. The business, which has been around since 1899, made more than $11 billion in sales over the previous 12 months.
Over the next five years, EPS should increase by 7% annually. Additionally, the dividend yield on VFC stock is 7.1%. Through 2027, total projected annual returns of 21.5% are calculated as 7.4% annual gains from an increasing P/E multiple.
Aside from the list of Dividend Aristocrats stocks above, you can also try investing your money in dividend-paying feeder funds like the multi-asset income funds.
At the end of the day, it is entirely up to you how would you want to manage your money or where you want to put it. It is either you put it in the bank for safekeeping and let it grow through the accumulated interest or put it in an investment. But remember that whatever is your decision, there are always risks.
In case you want to invest your hard-earned money in stocks, you have to do due diligence first. Do your own homework and study everything about the company where you want to invest your money. Do not be easily persuaded or blinded by any publicity because it may be a pitfall.
If you want to test the waters and enter the world of US stocks, you can check out exchanges like Etoro or buy partial shares through GoTrade.