During earnings season, analysts talk about earnings growth — and for good reason. Nothing drives stock prices higher than a company that consistently grows its earnings.
However, for dividend investors, earnings season equates to pay day. On or around the day a company reports earnings, companies that pay dividends quarterly, as many do, announce the date and amount of their dividend. If you rely on those dividends for income, you'll know when you'll get that money. And if you reinvest those dividends, you'll know when that transaction will take place.
Of course, the best dividend stocks are the ones that offer both dividend growth and stock price growth. This special presentation focuses on an elite group of stocks known as dividend aristocrats. These are companies that have increased their dividend for at least 25 consecutive years. The dividends of these companies are safe. And during this earnings season, analysts are bullish on the 12-month outlook for the stocks.
Quick Links
- Walmart
- Sherwin-Williams
- Lowe’s
- Nucor
- Albemarle
- Exxon Mobil
- AbbVie
#1 - Walmart (NYSE:WMT)
Many dividend aristocrats fall into the category of “forever stocks.” That term refers to stocks that you can rely on for solid stock price appreciation and dividend growth no matter what’s happening in the market or the world. And in the realm of forever stocks, Walmart Inc. (NYSE: WMT) has proven its worth time and again.
The company’s model of providing everyday low prices attracts low- to middle-income consumers. And as those consumers find themselves under pressure, Walmart is also attracting more affluent consumers who want their dollars to stretch farther.
In early 2024, Walmart split its stock 3-for-1. A stock split doesn’t change the valuation of a company but it has the tendency to positively affect investor sentiment. That’s been the case with WMT stock, which is up 28% in 2024. And the total return in WMT stock is over 100% in the last five years.
Plus, Walmart has increased its dividend for 52 consecutive years, which makes it not only a dividend aristocrat, but also a dividend king.
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
- $92.24
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 29 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $93.69 (1.6% Upside)
#2 - Sherwin-Williams (NYSE:SHW)
If you’re the type of investor who thinks watching dividend stocks grow is as exciting as watching paint dry, The Sherwin-Williams Company (NYSE: SHW) may change your mind.
In the last five years, the company synonymous with paint has rewarded investors with a total return of over 113%. - that’s more than Walmart's total return over that time period. Sherwin-Williams has increased its dividend for 47 consecutive years and has increased it at a rate of approximately 10% over the last three years.
Of course, past performance is not an accurate predictor of future performance. And continued weakness in the housing market may be the reason SHW stock is up only 9% in 2024.
However, management reiterated its full-year guidance for single-digit growth in revenue and earnings for the rest of the year. The guidance was cautious and likely doesn’t reflect a potential boost for one or more interest rate cuts which could provide a boost to home improvement stocks that will roll into 2025.
About Sherwin-Williams
The Sherwin-Williams Company engages in the development, manufacture, distribution, and sale of paints, coating, and related products to professional, industrial, commercial, and retail customers. It operates through three segments: Paint Stores Group, Consumer Brands Group, and Performance Coatings Group.
Read More - Current Price
- $345.47
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 12 Buy Ratings, 6 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $397.63 (15.1% Upside)
#3 - Lowe’s (NYSE:LOW)
Earnings season may be winding down, but the Atlantic hurricane season is just getting started. And with two storms already making landfall in the United States this year, investors are reminded of why Lowe’s Companies Inc. (NYSE: LOW) has growth drivers that go beyond the housing market.
The home improvement stock has been mostly rangebound for the last three years. It’s up just 7.9% in the 12 months ending August 5, 2024, and is up just 8.1% in 2024. Still, the five-year total return is around 165%. That speaks to a consistency that investors can appreciate.
Lowe’s is another dividend king on this list. The company has increased its dividend for 53 consecutive years. Over the last three years, the average dividend growth is over 24%.
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
- $247.72
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 16 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $280.85 (13.4% Upside)
#4 - Nucor (NYSE:NUE)
Dividend aristocrats give investors a reason to stay invested in cyclical stocks. That has been the case with steelmaker Nucor Corp. (NYSE: NUE). Steel has been in the news for many reasons, ranging from the potential purchase of U.S. Steel to how the Presidential candidates would handle Chinese steel imports.
Nucor sold off sharply on August 1 which largely tracks with recession fears and what that would mean for demand. The recent dip has pushed NUE stock down 13.7% in 2024. Much of that dip is due to lower steel prices.
But analysts give the stock a consensus price target of $191.29, which would be a 27% increase. This bullish outlook is likely based on the idea that demand for steel is about to turn around the NUE stock price. That demand is likely to come from the Federal Reserve’s decision to cut interest rates.
Nucor has increased its dividend for 51 consecutive years, with an average increase of 8.68% in the last three years. That’s part of the reason that NUE stock has delivered a total return of 219.75% in the last five years.
About Nucor
Nucor Corporation engages in manufacture and sale of steel and steel products. It operates in three segments: steel mills, steel products, and raw materials. The Steel Mills segment produces hot-rolled, cold-rolled, and galvanized sheet steel products; plate steel products; wide-flange beams, beam blanks, and H-piling and sheet piling structural steel products; bar steel products, such as blooms, billets, concrete reinforcing and merchant bars, and engineered special bar quality products; and engages in the steel trading and rebar distribution businesses.
Read More - Current Price
- $116.58
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 6 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $173.75 (49.0% Upside)
#5 - Albemarle (NYSE:ALB)
Leading global lithium miner Albemarle Corporation (NYSE: ALB) is another cyclical stock to consider. As many investors are aware, lithium is the key component in the lithium-ion batteries that are essential to many of the electronics we use every day, particularly for electric vehicles (EVs).
Supply-demand dynamics with EVs in the United States, in particular, is part of the reason behind the 41% year-to-date drop in ALB stock. Lithium prices are down with the market being amply supplied.
But if you’re looking at lithium as a long-term play, this could be a time to pick up shares of ALB stock, which is trading near five-year lows. Analysts believe Albemarle earnings could grow 154% in the next 12 months, which could lead to a 58% increase in the ALB stock price.
Albemarle has been increasing its dividend for 30 consecutive years. The current dividend yield is 1.96%.
About Albemarle
Albemarle Corporation develops, manufactures, and markets engineered specialty chemicals worldwide. It operates through three segments: Energy Storage, Specialties and Ketjen. The Energy Storage segment offers lithium compounds, including lithium carbonate, lithium hydroxide, and lithium chloride; technical services for the handling and use of reactive lithium products; and lithium-containing by-products recycling services.
Read More - Current Price
- $88.65
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 15 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $115.74 (30.6% Upside)
#6 - Exxon Mobil (NYSE:XOM)
Exxon Mobil Corp. (NYSE: XOM) is the last of the cyclical stocks on this list of dividend aristocrats. In this case, the company is tied to the fortunes of the oil and gas market. As of this writing, oil prices have broken below $80 as global demand is keeping a ceiling on prices.
However, there are many reasons to believe that demand will grow, and it may start with interest rate cuts. But you also have to consider geopolitical tensions, particularly if the Middle East conflict escalates and expands.
That outlook is supported by analysts who are projecting 14% earnings growth and a 16% increase in the XOM stock price. Exxon is also attractively valued at around 13x forward earnings, which is around the average forward P/E of integrated oil and gas companies. Exxon Mobil also generates significant free cash flow that will allow it to continue to fund acquisitions as it did with Pioneer Resources in 2023.
The total return in XOM stock over the last five years is 109%. The company has increased its dividend for 41 consecutive years.
About Exxon Mobil
Exxon Mobil Corporation engages in the exploration and production of crude oil and natural gas in the United States and internationally. It operates through Upstream, Energy Products, Chemical Products, and Specialty Products segments. The Upstream segment explores for and produces crude oil and natural gas.
Read More - Current Price
- $105.87
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 11 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $128.74 (21.6% Upside)
#7 - AbbVie (NYSE:ABBV)
AbbVie Inc. (NYSE: ABBV) is one of those stocks that perennially makes its name on a list of dividend aristocrats to buy. In the biopharmaceutical industry, it’s frequently said that it only takes one. That means, it only takes one blockbuster drug to take a company out of obscurity.
AbbVie has several drugs that meet that criteria. However, in recent years, that one drug has been Humira which is most notably used to treat rheumatoid arthritis and psoriatic arthritis.
ABBV stock has been rangebound for much of the last two years as Humira faced biosimilar competition. However, the company is showing investors that it already has drugs like Skryrizi and Rinvoq that are helping mitigate any decline in Humira sales. That's pushing the stock to new all-time highs. And there could be more to come.
ABBV stock has delivered a total return of 261% in the last five years. Analysts see another 11% earnings growth in the next 12 months. And while the consensus view is that this growth is priced into the stock, that could change with future earnings reports.
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
- $175.58
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 19 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $205.70 (17.2% Upside)
A criticism of dividend aristocrats is that, in many cases, they are defensive stocks. They shine brightly during times when market sentiment turns risk off. But, historically, they underperform bull markets. And during periods when investors are hungry for growth wherever they can find it, single-digit stock price growth is unappealing. Particularly when a stock like NVIDIA Corporation (NASDAQ: NVDA) is up more than 110% in the last 12 months (as of August 5, 2024).
While dividend stocks may lag growth stocks, a growing dividend can help close that gap when considering a stock's total return (stock price appreciation + dividend yield). And, by definition, dividend aristocrats have a history of not only paying dividends but increasing those dividends over time.
This doesn't guarantee that dividend aristocrats will outperform the market. But if you're playing the long game as many buy-and-hold investors do, it's worth your time to look for quality dividend aristocrats to add to your portfolio. You can find a list of the current dividend aristocrats on MarketBeat.com.
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