Top 5 Dividend Aristocrats with Strong Upside Potential
The title of “Dividend Aristocrat” is awarded to companies that have increased their shareholder dividends for at least 20 consecutive years. This impressive consistency captures the interest of many investors. Notably, funds that track the Dividend Aristocrats Index are required to hold these stocks. As a result, the demand can sometimes lead to high prices, limiting potential for further gains.
At ETF Channel, we analyzed the holdings of the SPDR S&P Dividend ETF, which mirrors the S&P High Yield Dividend Aristocrats Index. We discovered five dividend growth stocks that still show significant upside potential based on average analyst targets over the next 12 months. If analysts are right, these stocks may deliver not only capital gains but also increasing dividend payments.
In the table below, we list the five stocks along with their recent share prices, average analyst 12-month target prices, and the percentage upside needed to reach those targets.
| Stock | Recent Price | Avg. Analyst 12-Mo. Target | % Upside to Target |
|---|---|---|---|
| Exxon Mobil Corp (Symbol: XOM) | $106.42 | $131.39 | 23.46% |
| Best Buy Inc (Symbol: BBY) | $86.01 | $99.00 | 15.10% |
| Prosperity Bancshares Inc. (Symbol: PB) | $75.30 | $85.70 | 13.81% |
| Federal Realty Investment Trust (Symbol: FRT) | $109.93 | $124.73 | 13.47% |
| Lowe’s Companies Inc (Symbol: LOW) | $249.81 | $282.88 | 13.24% |
While the analyst target prices indicate future share prices, it’s important to remember that these companies are also expected to pay dividends during this year. To gauge total return potential, we combined the anticipated share price increases with current dividend yields, offering a more complete picture of expected returns:
| Stock | Dividend Yield | % Upside to Analyst Target | Implied Total Return Potential |
|---|---|---|---|
| Exxon Mobil Corp (Symbol: XOM) | 3.72% | 23.46% | 27.18% |
| Best Buy Inc (Symbol: BBY) | 4.37% | 15.10% | 19.47% |
| Prosperity Bancshares Inc. (Symbol: PB) | 3.08% | 13.81% | 16.89% |
| Federal Realty Investment Trust (Symbol: FRT) | 4.00% | 13.47% | 17.47% |
| Lowe’s Companies Inc (Symbol: LOW) | 1.84% | 13.24% | 15.08% |
Another key factor in evaluating these dividend stocks is their dividend growth rate. We compared the total dividends paid over the past twelve months with the dividends paid in the previous twelve months, providing insight into how much the dividends have increased:
| Stock | Prior TTM Dividend | TTM Dividend | % Growth |
|---|---|---|---|
| Exxon Mobil Corp (Symbol: XOM) | $3.68 | $3.84 | 4.35% |
| Best Buy Inc (Symbol: BBY) | $3.68 | $3.76 | 2.17% |
| Prosperity Bancshares Inc. (Symbol: PB) | $2.21 | $2.26 | 2.26% |
| Federal Realty Investment Trust (Symbol: FRT) | $4.33 | $4.37 | 0.92% |
| Lowe’s Companies Inc (Symbol: LOW) | $4.30 | $4.50 | 4.65% |
These stocks are part of our comprehensive Dividend Aristocrats List. The average analyst target price data used for this analysis was sourced from Zacks Investment Research via Quandl.com.
Dividend Growth Stocks: 25 Aristocrats »
Also see:
• ZING Historical Stock Prices
• FZ Videos
• MFIN shares outstanding history
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
