Written by 10-dividend-aristocrat-stocks-to-buy-now
March 2, 2020
The stock market is having its worst week since the financial crisis. For some investors, a flight to safety has them getting out of the market. But other investors are taking a flight to quality. And when it comes to quality in equities, these are the moments when dividend stocks shine.
Already JPMorgan Chase (NYSE:JPM), Morgan Stanley (NYSE:MS) and Goldman Sachs (NYSE:GS) are projecting that the coronavirus may wipe out corporate earnings growth for 2020. If investors can’t count on their equities to provide capital gains, they look to dividends to boost their total return.
But like any investment, not all dividend stocks are alike. Some of the best dividend stocks are the dividend aristocrats. By definition, for a company to become a dividend aristocrat, they must have at least 25 consecutive years of dividend growth (not just issued a dividend).
These companies have a proven track record of weathering market turbulence and delivering solid performance. And, right now, there are only 64 of these companies. In this presentation, we’ll give you 10 dividend aristocrat stocks you can invest in right now.
Quick Links
- Clorox
- Procter & Gamble
- Coca-Cola
- Walmart
- Walgreens Boots Alliance
- AbbVie
- Medtronic
- Lowe's
- McDonald’s
- AT&T
#1 - Clorox (NYSE:CLX)
Clorox (CLX) - I’m going to start with a couple of stocks that should give investors some capital gain in the short term in addition to its dividend. Clorox (NYSE:CLX) is surging as investors anticipate demand for the company’s hand sanitizers and disinfectants will increase. “Clorox is clearly positioned for a short-term gain as everyone needs additional disinfectant,” said William Susman, managing director at Threadstone Advisors to Bloomberg.
CLX stock was already rising during 2020. The cold and flu season is normally a catalyst for the stock. However, the stock has been moving in stark contrast to the broader market and is now up approximately 10% for the year. The stock reached a record high of $174.17 on February 27.
Clorox has a dividend yield of 2.5% and pays out an annual dividend of $4.24 per share. The company is averaging 8.93% dividend growth over the last three years. CLX currently has 42 consecutive years of dividend growth.
About Clorox
The Clorox Company manufactures and markets consumer and professional products worldwide. It operates through four segments: Health and Wellness, Household, Lifestyle, and International. The Health and Wellness segment offers cleaning products, such as laundry additives and home care products primarily under the Clorox, Clorox2, Scentiva, Pine-Sol, Liquid-Plumr, Tilex, and Formula 409 brands; professional cleaning and disinfecting products under the CloroxPro and Clorox Healthcare brands; professional food service products under the Hidden Valley brand; and vitamins, minerals and supplement products under the RenewLife, Natural Vitality, NeoCell, and Rainbow Light brands in the United States.
Read More - Current Price
- $168.05
- Consensus Rating
- Reduce
- Ratings Breakdown
- 1 Buy Ratings, 9 Hold Ratings, 5 Sell Ratings.
- Consensus Price Target
- $155.00 (7.8% Downside)
#2 - Procter & Gamble (NYSE:PG)
Procter & Gamble (PG) - Another stock that is cleaning up as the market digests the impact of the coronavirus is Procter & Gamble (NYSE:PG). A short-term catalyst for the stock is the company’s launch of a new brand that disinfects without wiping. The brand is Microban 24 includes a line of surface antibacterial cleaning products in both sanitizing spray and cleanser forms.
Unlike other household antibacterial products, Microban provides 24-hour protection from bacteria. This is because after consumers apply Microban they allow it to air dry. The solution releases small amounts of bacterial-resistant ingredients over the span of 24 hours.
Although the company has said the launch of Microban was not tied to the coronavirus (and realistically there’s no reason to believe it could have been), it will undoubtedly draw consumer interest to the stock.
Procter & Gamble stock currently has a dividend yield of 2.69% and pays an annual dividend of $2.98 per share. It has averaged 2.9% dividend growth over the last three years and has a whopping 63 consecutive years of annual dividend growth.
About Procter & Gamble
The Procter & Gamble Company engages in the provision of branded consumer packaged goods worldwide. The company operates through five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. The Beauty segment offers conditioners, shampoos, styling aids, and treatments under the Head & Shoulders, Herbal Essences, Pantene, and Rejoice brands; and antiperspirants and deodorants, personal cleansing, and skin care products under the Olay, Old Spice, Safeguard, Secret, SK-II, and Native brands.
Read More - Current Price
- $170.92
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 15 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $177.00 (3.6% Upside)
#3 - Coca-Cola (NYSE:KO)
Coca-Cola (KO) - My case for Coca-Cola (NYSE:KO) can be summed up as follows. If it’s good enough for Warren Buffett, it’s good enough for your portfolio. But Buffett’s investing style isn’t for everyone. And some investors will need more assurance than just a dividend, particularly with a company that appears to be in the crosshairs of healthy new alternatives.
However, while Coca-Cola did say they expect the coronavirus to affect first-quarter earnings, the company is confident it can offset that hit on earnings over the course of 2020. There is no question that Coca-Cola has exposure to China which is a market that accounted for 14% of the company’s 2019 revenue. But, you buy a stock like Coca-Cola for its dividend and KO’s dividend is rock solid and was just increased in February.
Coca-Cola stock currently has a dividend yield of 3% and pays an annual dividend of $1.60 per share. The company has increased its dividend by an average of 3.48% over the past three years and has 57 consecutive years of annual dividend growth.
About Coca-Cola
The Coca-Cola Company, a beverage company, manufactures, markets, and sells various nonalcoholic beverages worldwide. The company provides sparkling soft drinks, sparkling flavors; water, sports, coffee, and tea; juice, value-added dairy, and plant-based beverages; and other beverages. It also offers beverage concentrates and syrups, as well as fountain syrups to fountain retailers, such as restaurants and convenience stores.
Read More - Current Price
- $63.01
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 13 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $72.36 (14.8% Upside)
#4 - Walmart (NYSE:WMT)
Walmart (WMT) Walmart (NYSE:WMT) went up in February even after the company missed on both earnings and revenue estimates in its fourth-quarter earnings report. One reason investors may have shrugged off this disappointing news was that the company’s net income for the fourth quarter was significantly higher on a year-over-year basis.
It’s never a good thing for a company to see a decline in profits. And investors had to be hoping that Walmart stock would get some relief with a pause in the U.S.-China trade war. However, now the coronavirus has to be creating supply chain questions. The stock was basically flat for the year before the market correction began this week. Now the stock is down over 10% for the year.
But, as with many of the stocks in this presentation, you have to expect lower earnings for 2020. With these stocks, it’s the dividend that matters. And Walmart is a solid performer in that area.
WMT stock currently has a dividend yield of 1.99% and pays an annual dividend of $2.12 per share. The company has increased its dividend by an average of 1.92% each year for the past three years and has 45 consecutive years of annual dividend growth.
About Walmart
Walmart Inc engages in the operation of retail, wholesale, other units, and eCommerce worldwide. The company operates through three segments: Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, and discount stores under Walmart and Walmart Neighborhood Market brands; membership-only warehouse clubs; ecommerce websites, such as walmart.com.mx, walmart.ca, flipkart.com, PhonePe and other sites; and mobile commerce applications.
Read More - Current Price
- $87.18
- Consensus Rating
- Buy
- Ratings Breakdown
- 29 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $91.51 (5.0% Upside)
#5 - Walgreens Boots Alliance (NASDAQ:WBA)
Walgreens Boots Alliance (WBA) Walgreens (NASDAQ:WBA) stock is off to a rough start in 2020, but now may be an opportunity for the stock to shine. In the first place, the company’s revenue is increasing. The company’s total revenue has grown at a CAGR of 5.4% between 2016 through 2019. And this revenue was primarily driven through the company’s pharmacy business.
That looks to continue be a driver for the business in 2020 with the company expecting the pharmacy to contribute $84 billion to the company’s fiscal 2020 revenues. That would account for nearly 60%. It’s reasonable to expect that Walgreen’s may get a boost from ancillary sales as consumers stock up on other products as they fill prescriptions.
Walgreen’s Boots Alliance has a dividend yield of 4.10% and pays an annual dividend of $1.83 per share. The company has increased its dividend by an average of 5.69% annually for the past three years and has 44 consecutive years of annual dividend growth.
About Walgreens Boots Alliance
Walgreens Boots Alliance, Inc operates as a healthcare, pharmacy, and retail company in the United States, the United Kingdom, Germany, and internationally. It operates through three segments: U.S. Retail Pharmacy, International, and U.S. Healthcare. The U.S. Retail Pharmacy segment engages in operation of the retail drugstores, health and wellness services, specialty, and home delivery pharmacy services, which offers health and wellness, beauty, personal care and consumables, and general merchandise.
Read More - Current Price
- $8.24
- Consensus Rating
- Reduce
- Ratings Breakdown
- 2 Buy Ratings, 9 Hold Ratings, 4 Sell Ratings.
- Consensus Price Target
- $12.88 (56.4% Upside)
#6 - AbbVie (NYSE:ABBV)
AbbVie (ABBV) AbbVie (NYSE:ABBV) recently posted an earnings report that beat on both the top line and bottom line. The company posted earnings per share (EPS) of $2.21 on revenue of $8.70 billion. Heading into earnings, analysts were calling for earnings per share (EPS) of $2.19 on revenue of $8.68 billion.
AbbVie has a drug in its pipeline that is being used to treat the coronavirus. But the long-term story for AbbVie is that it has a sound pipeline of oncology and anti-viral drugs. And it has massive cash flow. Both of these are important as the company will be seeing its patents expire on Humira. The company is already seeing atrophy with Humira. European sales declined by 23% in the first quarter. However, in the United States, Humira sales grew 7% to $3.2 billion.
AbbVie stock has a dividend yield of 5.73% and pays out an annual dividend of $4.72 per share. The company has posted annual dividend growth of 22.62% over the last three years and has 47 years of consecutive dividend growth.
About AbbVie
AbbVie Inc discovers, develops, manufactures, and sells pharmaceuticals worldwide. The company offers Humira, an injection for autoimmune and intestinal Behçet's diseases, and pyoderma gangrenosum; Skyrizi to treat moderate to severe plaque psoriasis, psoriatic disease, and Crohn's disease; Rinvoq to treat rheumatoid and psoriatic arthritis, ankylosing spondylitis, atopic dermatitis, axial spondyloarthropathy, ulcerative colitis, and Crohn's disease; Imbruvica for the treatment of adult patients with blood cancers; Epkinly to treat lymphoma; Elahere to treat cancer; and Venclexta/Venclyxto to treat blood cancers.
Read More - Current Price
- $167.74
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 18 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $203.37 (21.2% Upside)
#7 - Medtronic (NYSE:MDT)
Medtronic (MDT) Medtronic (NYSE:MDT) operates at the intersection of two growing sectors: health care and technology. One area that the company is involved in is medical devices. This is a long-standing favorite of bullish investors and right now seems no different. Prior to the market correction MDT stock was up over 25% in the past 12 months compared to the industry average of 10%.
The company had a mixed earnings report that found them missing on revenue. And the company advised that 2020 earnings and revenue may be impacted by the coronavirus. But shares were largely unaffected. This may be because of Medtronic’s long-term investment in digital surgery. This brings together health care with artificial intelligence (AI). It’s an area that shows a high growth potential as only 2% of current surgeries worldwide are performed with the help of robotic systems.
MDT stock has a dividend yield of 2.21% and pays out an annual dividend of $2.16 per share. The company has posted annual dividend growth of 6.07% over the last three years and has 42 years of consecutive dividend growth.
About Medtronic
Medtronic plc develops, manufactures, and sells device-based medical therapies to healthcare systems, physicians, clinicians, and patients worldwide. Its Cardiovascular Portfolio segment offers implantable cardiac pacemakers, cardioverter defibrillators, and cardiac resynchronization therapy devices; cardiac ablation products; insertable cardiac monitor systems; TYRX products; and remote monitoring and patient-centered software.
Read More - Current Price
- $84.11
- Consensus Rating
- Hold
- Ratings Breakdown
- 8 Buy Ratings, 9 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $95.19 (13.2% Upside)
#8 - Lowe's (NYSE:LOW)
Lowe’s (LOW) Lowe’s (NYSE:LOW) is coming off a solid year in 2019. The company is managing to reinvent its business in the face of competitive threats such as it receives from Home Depot (NYSE:HD). To that end the company has been trying to change both the physical footprint of its stores and its e-commerce presence.
The company’s most recent earnings report suggests it might still have some work to do. The company’s revenue came in below the FactSet estimate. But of more concern, it was driven largely by the brick-and-mortar stores. The company is about a year behind Home Depot in its e-commerce efforts. However, it was only in its most recent quarter that Home Depot showed evidence that those efforts were paying off.
Lowe’s stock has a dividend yield of 2.11% and pays out an annual dividend of $2.20 per share. The company has posted annual dividend growth of 13.12% over the last three years and has 57 years of consecutive dividend growth.
About Lowe's Companies
Lowe's Companies, Inc, together with its subsidiaries, operates as a home improvement retailer in the United States. The company offers a line of products for construction, maintenance, repair, remodeling, and decorating. It also provides home improvement products, such as appliances, seasonal and outdoor living, lawn and garden, lumber, kitchens and bath, tools, paint, millwork, hardware, flooring, rough plumbing, building materials, décor, and electrical.
Read More - Current Price
- $263.03
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 15 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $277.92 (5.7% Upside)
#9 - McDonald’s (NYSE:MCD)
McDonald’s (MCD) Will people really eat less fast food because of the coronavirus? That’s the question you have to consider if you’re going to overlook McDonald’s (NYSE:MCD) stock. The company was enjoying a nice gain of nearly 10% for the year before the market correction.
But when something like the coronavirus hits, it may very well turn out to be a validation of the company’s transition to partnering with food delivery apps. While I’ve tended to be a skeptic of having McDonald’s conveniently delivered, the momentum speaks for itself. Is this really safer? Who knows, but perception is reality.
To be fair, prior to the market correction, there were probably some other restaurant stocks that may be better than MCD. And over the long run, those may still turn out to be better. But as an investor, trading in the here and now, the safety and virtual guarantee of the company’s dividend is too good to ignore.
MCD stock has a dividend yield of 2.62% and pays out an annual dividend of $5.00 per share. The company has posted annual dividend growth of 9.62% over the last three years and has 43 years of consecutive dividend growth.
About McDonald's
McDonald's Corporation operates and franchises restaurants under the McDonald's brand in the United States and internationally. It offers food and beverages, including hamburgers and cheeseburgers, various chicken sandwiches, fries, shakes, desserts, sundaes, cookies, pies, soft drinks, coffee, and other beverages; and full or limited breakfast, as well as sells various other products during limited-time promotions.
Read More - Current Price
- $290.89
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 18 Buy Ratings, 12 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $319.46 (9.8% Upside)
#10 - AT&T (NYSE:T)
AT&T (T) - Shares of AT&T (NYSE:T) have followed the path of most stocks during this correction. No more, but unfortunately no less. Nevertheless, the stock is still in positive territory over the last 12 months.
One reason why I like AT&T stock right now is that telecom stocks are good defensive stocks. This means they perform well regardless of what is happening in the broader economy. Certainly AT&T is expecting to get a boost from the 5G revolution, and the company was also forecasting a boost in retail sales with the launch of 5G offerings from Apple and other companies.
Both of those scenarios may be delivering less profit than AT&T was hoping for. Nevertheless, the company has diligently invested in other revenue streams. In 2018, AT&T paid $33 billion to acquire content from Time-Warner. This new business unit, Warner Media, which includes HBO, puts AT&T into the streaming wars.
And although there is some concern about the company’s future relationship with DirecTV, the company should still benefit this year. DirecTV will have the contract for the NFL Sunday Ticket through the 2020 season. And the Sunday Ticket is a significant profit driver for the company.
AT&T stock has a dividend yield of 6.04% and pays out an annual dividend of $2.08 per share. The company has posted annual dividend growth of 2% over the last three years and has 35 years of consecutive dividend growth.
About AT&T
AT&T Inc provides telecommunications and technology services worldwide. The company operates through two segments, Communications and Latin America. The Communications segment offers wireless voice and data communications services; and sells handsets, wireless data cards, wireless computing devices, carrying cases/protective covers, and wireless chargers through its own company-owned stores, agents, and third-party retail stores.
Read More - Current Price
- $22.83
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $23.40 (2.5% Upside)
Markets hate uncertainty. And there is no question that the coronavirus is delivering a level of uncertainty to global supply chains. Already many companies are issuing travel bans to China and consumers are debating whether to follow through with travel plans. But for most investors, now is not a time to panic. But it may require making some prudent adjustments.
When “Black Swan” events such as the coronavirus occur, it’s easy to identify the sectors that are under pressure. Travel stocks and energy stocks are under pressure as investors try to ascertain the long-term effect on travel and tourism. Airline stocks and hotel stocks are eagerly waiting for business travel to return to normal. Even a stock like Apple (NASDAQ:AAPL) is under pressure because of their manufacturing exposure in China. This continues even as CEO Tim Cook is attempting to reassure investors.
It can be harder to see the silver linings. But you don’t have to wait on the sidelines or park your money in U.S. Treasuries that are seeing their yield drop to historic lows. It’s unlikely for you to expect the same total return you got in 2019. However, the prudent addition of some of these dividend aristocrats can provide some much-needed stability to your portfolio.
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