Five Dividend Aristocrats with Strong Growth Potential
To qualify as a “Dividend Aristocrat,” a company must consistently raise its dividends for at least 20 consecutive years, a feat only achieved by a select few. Such companies attract significant investor attention, and funds that track the Dividend Aristocrats Index must hold them. The high demand for these shares can lead to prices that don’t offer much room for growth, leaving investors seeking opportunities.
At ETF Channel, we reviewed the holdings of the SPDR S&P Dividend ETF, which tracks the S&P High Yield Dividend Aristocrats Index. We identified five dividend growth stocks that still show considerable potential for price appreciation based on analyst targets over the next 12 months. If analysts are correct, these companies could yield capital gains alongside their growing dividends.
The table below displays the five identified stocks, including their current share price, the average 12-month analyst target price, and the percentage upside to reach those targets.
| Stock | Recent Price | Avg. Analyst 12-Mo. Target | % Upside to Target |
|---|---|---|---|
| Stanley Black & Decker Inc (Symbol: SWK) | $80.29 | $103.27 | 28.62% |
| NextEra Energy Inc (Symbol: NEE) | $71.69 | $87.68 | 22.31% |
| Ecolab Inc (Symbol: ECL) | $234.32 | $281.47 | 20.12% |
| PepsiCo Inc (Symbol: PEP) | $152.06 | $181.78 | 19.54% |
| Northrop Grumman Corp (Symbol: NOC) | $469.29 | $560.85 | 19.51% |
While the average target prices are notable, it’s essential to remember that each company is expected to distribute dividends during the specified period. Therefore, the total return potential considers both share price increases and dividend yields. To estimate this, we added the current dividend yield to the anticipated share price growth, resulting in the total return potential over the next 12 months:
| Stock | Dividend Yield | % Upside to Analyst Target | Implied Total Return Potential |
|---|---|---|---|
| Stanley Black & Decker Inc (Symbol: SWK) | 4.09% | 28.62% | 32.71% |
| NextEra Energy Inc (Symbol: NEE) | 2.87% | 22.31% | 25.18% |
| Ecolab Inc (Symbol: ECL) | 1.11% | 20.12% | 21.23% |
| PepsiCo Inc (Symbol: PEP) | 3.56% | 19.54% | 23.10% |
| Northrop Grumman Corp (Symbol: NOC) | 1.76% | 19.51% | 21.27% |
It’s also important to evaluate how much these dividends are growing. We looked at the dividends each stock paid over the last twelve months and compared them to the previous year’s total. This comparison reveals the growth rate of these dividends:
| Stock | Prior TTM Dividend | TTM Dividend | % Growth |
|---|---|---|---|
| Stanley Black & Decker Inc (Symbol: SWK) | $3.22 | $3.26 | 1.24% |
| NextEra Energy Inc (Symbol: NEE) | $1.872 | $2.06 | 10.04% |
| Ecolab Inc (Symbol: ECL) | $2.16 | $2.36 | 9.26% |
| PepsiCo Inc (Symbol: PEP) | $4.945 | $5.33 | 7.79% |
| Northrop Grumman Corp (Symbol: NOC) | $7.34 | $8.05 | 9.67% |
These five companies are included in our comprehensive Dividend Aristocrats List. The analyst target pricing data in this article comes from Zacks Investment Research via Quandl.com.
Explore More Dividend Growth Stocks: 25 Aristocrats »
Additional Resources:
Top Ten Hedge Funds Holding PHCC
SKM Price Target
Institutional Holders of Kraft Heinz
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
