Five Dividend Aristocrats with Strong Growth Potential
To qualify as a “Dividend Aristocrat,” a company must consistently increase its shareholder dividends for at least 20 consecutive years. Companies achieving this milestone often capture significant investor interest, creating strong demand for their shares. As a result, many dividend growth stocks can become “fully priced,” limiting their anticipated growth according to analyst targets.
At ETF Channel, we examined the holdings of the SPDR S&P Dividend ETF, which tracks the S&P High Yield Dividend Aristocrats Index. We discovered five dividend growth stocks with substantial upside potential based on average analyst target prices for the next 12 months. If analysts are correct, these stocks may deliver capital gains alongside increasing dividend payments.
The following table showcases these promising stocks, including their recent share prices, average analyst target prices, and percentage upside to reach those targets.
| Stock | Recent Price | Avg. Analyst 12-Mo. Target | % Upside to Target |
|---|---|---|---|
| Eversource Energy (Symbol: ES) | $60.84 | $73.73 | 21.19% |
| Target Corp (Symbol: TGT) | $154.99 | $176.78 | 14.06% |
| National Fuel Gas Co. (Symbol: NFG) | $60.93 | $67.00 | 9.96% |
| Jack Henry & Associates, Inc. (Symbol: JKHY) | $174.98 | $191.64 | 9.52% |
| Flowers Foods, Inc. (Symbol: FLO) | $21.63 | $23.50 | 8.65% |
The average analyst target prices reflect anticipated share prices, but each of these stocks is expected to pay dividends during the next year. Thus, to estimate the total return for investors, we combined the analysts’ projected price increases with the expected dividend yields. The table below illustrates these total return potentials for each stock:
| Stock | Dividend Yield | % Upside to Analyst Target | Implied Total Return Potential |
|---|---|---|---|
| Eversource Energy (Symbol: ES) | 4.70% | 21.19% | 25.89% |
| Target Corp (Symbol: TGT) | 2.89% | 14.06% | 16.95% |
| National Fuel Gas Co. (Symbol: NFG) | 3.38% | 9.96% | 13.34% |
| Jack Henry & Associates, Inc. (Symbol: JKHY) | 1.26% | 9.52% | 10.78% |
| Flowers Foods, Inc. (Symbol: FLO) | 4.44% | 8.65% | 13.09% |
Another important aspect of dividend growth stocks is the rate at which their dividends are increasing. We examined the most recent dividends paid out, known as trailing twelve months (TTM) dividends, and compared them to the TTM dividends from the prior year. This comparison helps gauge how much the dividends have grown over time.
| Stock | Prior TTM Dividend | TTM Dividend | % Growth |
|---|---|---|---|
| Eversource Energy (Symbol: ES) | $2.663 | $2.82 | 5.90% |
| Target Corp (Symbol: TGT) | $4.34 | $4.42 | 1.84% |
| National Fuel Gas Co. (Symbol: NFG) | $1.94 | $2.02 | 4.12% |
| Jack Henry & Associates, Inc. (Symbol: JKHY) | $2.05 | $2.17 | 5.85% |
| Flowers Foods, Inc. (Symbol: FLO) | $0.90 | $0.94 | 4.44% |
These five stocks are part of our complete Dividend Aristocrats List. The analysis of average analyst target prices was aided by data from Zacks Investment Research via Quandl.com.
Dividend Growth Stocks: 25 Aristocrats »
Also see:
• Funds Holding X
• Top Ten Hedge Funds Holding ROCR
• QCCO Insider Buying
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
