Top Dividend Aristocrats Poised for Capital Gains
To earn the title of “Dividend Aristocrat,” a company must demonstrate outstanding performance by increasing its shareholder dividends for at least 20 years in a row. These companies attract significant investor interest, as tracking funds that follow the Dividend Aristocrats Index are required to include them in their holdings. Due to high demand, some dividend growth stocks may become “fully priced,” leading to limited upside potential. However, we have identified five dividend growth stocks within the SPDR S&P Dividend ETF, which tracks the S&P High Yield Dividend Aristocrats Index, that still show substantial upside potential based on average analyst target prices.
The following table lists these five stocks, along with their recent share price, the average analyst 12-month target price, and the percentage upside needed to reach that target.
| Stock | Recent Price | Avg. Analyst 12-Mo. Target | % Upside to Target |
|---|---|---|---|
| Stanley Black & Decker Inc (Symbol: SWK) | $93.89 | $107.73 | 14.74% |
| NextEra Energy Inc (Symbol: NEE) | $79.56 | $87.89 | 10.47% |
| Northrop Grumman Corp (Symbol: NOC) | $504.05 | $556.42 | 10.39% |
| Franklin Electric Co., Inc. (Symbol: FELE) | $96.09 | $106.00 | 10.31% |
| PepsiCo Inc (Symbol: PEP) | $167.50 | $183.39 | 9.49% |
While the analyst target prices forecast share price potential, dividends will also be paid during this period. The estimated total return combines the share price upside and the dividend yield for these stocks. Our next table summarizes the total return potential, including the current yield added to the analyst target price upside.
| Stock | Dividend Yield | % Upside to Analyst Target | Implied Total Return Potential |
|---|---|---|---|
| Stanley Black & Decker Inc (Symbol: SWK) | 3.49% | 14.74% | 18.23% |
| NextEra Energy Inc (Symbol: NEE) | 2.59% | 10.47% | 13.06% |
| Northrop Grumman Corp (Symbol: NOC) | 1.63% | 10.39% | 12.02% |
| Franklin Electric Co., Inc. (Symbol: FELE) | 1.04% | 10.31% | 11.35% |
| PepsiCo Inc (Symbol: PEP) | 3.24% | 9.49% | 12.73% |
Another important aspect of dividend growth stocks is the growth rate of their dividends. We analyzed the dividends paid over the trailing twelve months (TTM) for each of these five companies, comparing them to the previous year’s performance. This comparison gives us insight into how much the dividends have increased over the past year.
| Stock | Prior TTM Dividend | TTM Dividend | % Growth |
|---|---|---|---|
| Stanley Black & Decker Inc (Symbol: SWK) | $3.21 | $3.25 | 1.25% |
| NextEra Energy Inc (Symbol: NEE) | $1.829 | $2.013 | 10.06% |
| Northrop Grumman Corp (Symbol: NOC) | $7.20 | $7.86 | 9.17% |
| Franklin Electric Co., Inc. (Symbol: FELE) | $0.87 | $0.975 | 12.07% |
| PepsiCo Inc (Symbol: PEP) | $4.83 | $5.24 | 8.49% |
These five companies are part of the comprehensive Dividend Aristocrats List. The average analyst target price data used in this analysis is sourced from Zacks Investment Research via Quandl.com.
Dividend Growth Stocks: 25 Aristocrats »
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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
