Five Dividend Aristocrats with Strong Growth Potential
To achieve the prestigious title of “Dividend Aristocrat,” a company must raise its shareholder dividends every year for a minimum of 20 consecutive years. Such a remarkable achievement often catches the eye of investors, and funds that track the Dividend Aristocrats Index are required to include these stocks in their portfolios. This demand can sometimes lead to these dividend growth stocks being “fully priced,” where their share prices offer limited upside based on analysts’ targets.
At ETF Channel, we examined the stocks found in the SPDR S&P Dividend ETF, which tracks the S&P High Yield Dividend Aristocrats Index. We’ve identified five dividend growth stocks that still show significant upside based on average analyst target prices over the next year. If analysts are correct, these stocks may offer both capital gains and increasing dividend payments.
The table below shows the recent share price, the average analyst 12-month target price, and the percentage increase required to reach that target for each of these five stocks.
| Stock | Recent Price | Avg. Analyst 12-Mo. Target | % Upside to Target |
|---|---|---|---|
| Carlisle Companies Inc. (Symbol: CSL) | $417.20 | $467.20 | 11.98% |
| Pentair PLC (Symbol: PNR) | $98.96 | $110.23 | 11.39% |
| McDonald’s Corp (Symbol: MCD) | $292.61 | $321.23 | 9.78% |
| Berkley Corp (Symbol: WRB) | $58.16 | $63.69 | 9.51% |
| Old Republic International Corp. (Symbol: ORI) | $34.40 | $37.50 | 9.01% |
It’s important to note that the average analyst targets refer only to share price and do not factor in the expected dividends during the holding period. To estimate the total return potential, we combined the share price upside with the dividend yield. The table below outlines this implied total return.
| Stock | Dividend Yield | % Upside to Analyst Target | Implied Total Return Potential |
|---|---|---|---|
| Carlisle Companies Inc. (Symbol: CSL) | 0.96% | 11.98% | 12.94% |
| Pentair PLC (Symbol: PNR) | 0.93% | 11.39% | 12.32% |
| McDonald’s Corp (Symbol: MCD) | 2.42% | 9.78% | 12.20% |
| Berkley Corp (Symbol: WRB) | 0.55% | 9.51% | 10.06% |
| Old Republic International Corp. (Symbol: ORI) | 3.08% | 9.01% | 12.09% |
Investors should also consider how much these companies are increasing their dividends. By comparing the trailing twelve months (TTM) dividends from the previous year to the most recent period, we can assess the growth in dividend payments. The table below summarizes this growth percentage.
| Stock | Prior TTM Dividend | TTM Dividend | % Growth |
|---|---|---|---|
| Carlisle Companies Inc. (Symbol: CSL) | $3.10 | $3.55 | 14.52% |
| Pentair PLC (Symbol: PNR) | $0.88 | $0.92 | 4.55% |
| McDonald’s Corp (Symbol: MCD) | $6.08 | $6.68 | 9.87% |
| Berkley Corp (Symbol: WRB) | $0.95 | $1.22 | 29.23% |
| Old Republic International Corp. (Symbol: ORI) | $0.97 | $1.04 | 7.77% |
These five stocks are included in our comprehensive Dividend Aristocrats List. The average analyst target price data used in this article comes from Zacks Investment Research via Quandl.com.
Dividend Growth Stocks: 25 Aristocrats »
Also see:
• Agricultural Chemicals Dividend Stocks
• CNI Stock Predictions
• Funds Holding CUZ
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
