Five Dividend Aristocrats with Untapped Growth Potential
To earn the title of “Dividend Aristocrat,” a company must consistently raise its shareholder dividends every year for at least 20 years. This impressive achievement catches the attention of investors and mandates that funds tracking the Dividend Aristocrats Index include them in their portfolios. Due to this high demand, these dividend growth stocks can often reach a point where their prices reflect their full value, leaving little room for future increases.
However, our team at ETF Channel examined the holdings of the SPDR S&P Dividend ETF, which follows the S&P High Yield Dividend Aristocrats Index, to identify five dividend growth stocks that still show significant upside potential according to analyst predictions for the next 12 months. If the analysts are correct, these companies could provide both rising dividends and valuable capital gains.
The table below lists the five identified stocks along with their recent share prices, average analyst price targets for the coming year, and the percentage increase required to reach those targets.
| Stock | Recent Price | Avg. Analyst 12-Mo. Target | % Upside to Target |
|---|---|---|---|
| Albemarle Corp. (Symbol: ALB) | $99.60 | $114.69 | 15.16% |
| Lincoln Electric Holdings, Inc. (Symbol: LECO) | $193.57 | $221.00 | 14.17% |
| Lancaster Colony Corp (Symbol: LANC) | $179.77 | $203.75 | 13.34% |
| Target Corp (Symbol: TGT) | $157.97 | $177.74 | 12.52% |
| Eversource Energy (Symbol: ES) | $64.02 | $72.00 | 12.46% |
It’s essential to note that the average 12-month analyst target prices refer only to share prices. Each stock listed is also expected to pay dividends throughout this period. Therefore, to get a better idea of total return potential, we calculated the expected total return by combining the share price upside with the current dividend yields. This is summarized in the table below.
| Stock | Dividend Yield | % Upside to Analyst Target | Implied Total Return Potential |
|---|---|---|---|
| Albemarle Corp. (Symbol: ALB) | 1.63% | 15.16% | 16.79% |
| Lincoln Electric Holdings, Inc. (Symbol: LECO) | 1.47% | 14.17% | 15.64% |
| Lancaster Colony Corp (Symbol: LANC) | 2.00% | 13.34% | 15.34% |
| Target Corp (Symbol: TGT) | 2.84% | 12.52% | 15.36% |
| Eversource Energy (Symbol: ES) | 4.47% | 12.46% | 16.93% |
It’s also crucial to consider how much the dividends are increasing over time. We researched the last twelve months of dividends for these five companies and compared them to the previous year’s figures. This assessment provides insight into the growth of dividends year over year.
| Stock | Prior TTM Dividend | TTM Dividend | % Growth |
|---|---|---|---|
| Albemarle Corp. (Symbol: ALB) | $1.595 | $1.605 | 0.63% |
| Lincoln Electric Holdings, Inc. (Symbol: LECO) | $2.56 | $2.84 | 10.94% |
| Lancaster Colony Corp (Symbol: LANC) | $3.4 | $3.6 | 5.88% |
| Target Corp (Symbol: TGT) | $4.34 | $4.42 | 1.84% |
| Eversource Energy (Symbol: ES) | $2.663 | $2.82 | 5.90% |
These five stocks are included in our complete Dividend Aristocrats List. The average analyst target price data utilized in this article is sourced from Zacks Investment Research via Quandl.com.
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
