Five Dividend Aristocrats Still Poised for Growth
Investors Eye Significant Upside Potential in Solid Dividend Stocks
To achieve the prestigious title of “Dividend Aristocrat,” a company must continuously raise its shareholder dividends for over 20 years. Firms meeting this criterion draw considerable investor interest, especially since tracking funds tied to the Dividend Aristocrats Index are required to hold these stocks. Consequently, the demand for these shares can lead to their becoming “fully priced,” which limits potential growth in stock value based on analyst expectations.
However, our team at ETF Channel has sifted through the holdings of the SPDR S&P Dividend ETF, which follows the S&P High Yield Dividend Aristocrats Index. We identified five dividend growth stocks that still exhibit substantial upside potential based on analyst target prices for the next 12 months. If analyst predictions hold true, these stocks could provide both capital appreciation and increasing dividend payouts.
The table below outlines the five stocks, including their recent prices, average analyst target prices for the next year, and the percentage increase needed to reach these targets:
| Stock | Recent Price | Avg. Analyst 12-Mo. Target | % Upside to Target |
|---|---|---|---|
| Community Financial System Inc (Symbol: CBU) | $62.98 | $69.83 | 10.88% |
| Target Corp (Symbol: TGT) | $132.40 | $146.73 | 10.82% |
| McCormick & Co Inc (Symbol: MKC) | $78.03 | $86.46 | 10.80% |
| Genuine Parts Co. (Symbol: GPC) | $117.29 | $129.67 | 10.55% |
| Sysco Corp (Symbol: SYY) | $77.53 | $85.69 | 10.53% |
It’s important to note that the above analyst target prices reflect only share price expectations. Each of these companies is also set to distribute dividends during the upcoming year. Therefore, to estimate the overall return potential, we have combined the dividend yield with the target price upside, resulting in the following 12-month total return estimates:
| Stock | Dividend Yield | % Upside to Analyst Target | Implied Total Return Potential |
|---|---|---|---|
| Community Financial System Inc (Symbol: CBU) | 2.92% | 10.88% | 13.80% |
| Target Corp (Symbol: TGT) | 3.38% | 10.82% | 14.20% |
| McCormick & Co Inc (Symbol: MKC) | 2.31% | 10.80% | 13.11% |
| Genuine Parts Co. (Symbol: GPC) | 3.41% | 10.55% | 13.96% |
| Sysco Corp (Symbol: SYY) | 2.63% | 10.53% | 13.16% |
Another crucial factor to consider with dividend growth stocks is the growth rate of their dividends. We have reviewed the last twelve months of dividends received by shareholders of these five companies, comparing them to dividends from the previous year. This helps us gauge the growth rate in dividends over time.
| Stock | Prior TTM Dividend | TTM Dividend | % Growth |
|---|---|---|---|
| Community Financial System Inc (Symbol: CBU) | $1.78 | $1.82 | 2.25% |
| Target Corp (Symbol: TGT) | $4.36 | $4.44 | 1.83% |
| McCormick & Co Inc (Symbol: MKC) | $1.56 | $1.68 | 7.69% |
| Genuine Parts Co. (Symbol: GPC) | $3.80 | $4.00 | 5.26% |
| Sysco Corp (Symbol: SYY) | $1.98 | $2.02 | 2.02% |
The five stocks discussed here are part of our comprehensive Dividend Aristocrats List. The analyst target price data referenced in this article comes from Zacks Investment Research via Quandl.com.
Dividend Growth Stocks: 25 Aristocrats »
Also See:
• Institutional Holders of MBII
• WBX Stock Predictions
• NICK Insider Buying
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
