When a company can avoid cutting its dividend even during economic recessions and crises, investors know its stock is a reliable investment. However, there’s a special breed of dividend stocks that takes reliability, consistency and dependability to another level.
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The dividend aristocrats are a group of 64 S&P 500 stocks that have somehow managed to raise their dividend payments each year for at least 25 consecutive years. For decades, each has rewarded its investors for loyalty and demonstrated its commitment to shareholder returns.
Here are nine of the best dividend aristocrat stocks to buy, according to CFRA Research analysts:
|Stock||Implied upside over March 7 closing price|
|Dover Corp. (ticker: DOV)||4.7%|
|Coca-Cola Co. (KO)||13.3%|
|Federal Realty Investment Trust (FRT)||19.4%|
|Abbott Laboratories (ABT)||21%|
|PepsiCo Inc. (PEP)||15.8%|
|S&P Global Inc. (SPGI)||26.2%|
|Walmart Inc. (WMT)||17.1%|
|VF Corp. (VFC)||81.4%|
|McDonald’s Corp. (MCD)||9.3%|
Dover Corp. (DOV)
Dover is an industrial machinery company that produces specialized industrial products and manufacturing equipment. Dover has also raised its dividend for 67 consecutive years, a longer track record of increases than any other dividend aristocrat. Analyst Jonathan Sakraida says Dover’s recent cost-cutting initiatives and decision to shift its portfolio to focus on higher-margin products will help the company grow earnings and outperform peers over the long term. Sakraida projects 5% revenue growth this year, as supply chain disruptions ease. CFRA has a “buy” rating and $160 price target for DOV stock.
Coca-Cola Co. (KO)
Coca-Cola is one of the world’s most valuable brands and the largest manufacturer of soft drinks. Analyst Garrett Nelson says the pending resolution of its tax case with the IRS could remove a major source of uncertainty and serve as a bullish catalyst for the stock. Nelson says Coca-Cola has solid fundamentals and is benefiting from a post-pandemic rebound in on-premise sales. Coca-Cola has raised its payout for 60 consecutive years. CFRA has a “buy” rating and $68 price target for KO stock.
Federal Realty Investment Trust (FRT)
Federal Realty Investment Trust is a retail-focused real estate investment trust, or REIT, that owns and manages community and neighborhood shopping centers. Federal Realty’s dividend more than doubles the S&P 500 average yield of 1.7%. Analyst Michael Elliott says the REIT has a solid portfolio of mixed-use communities that include a variety of commercial and multifamily residential units. Elliott projects rental and leasing growth will boost funds from operations. Federal Realty has raised its payout for 55 consecutive years. CFRA has a “buy” rating and $124 price target for FRT stock.
Abbott Laboratories (ABT)
Abbott Laboratories is a diversified global health care company that produces branded generic pharmaceuticals, medical devices, and other nutritional and diagnostic products. Analyst Paige Meyer says Abbott’s diversified business, expanding market share, strong balance sheet and growing dividend will help it outperform peers over the long term. Meyer says that Abbott’s 2023 growth numbers will be dragged down by a sharp drop in COVID-19 testing demand. She projects Abbott’s revenue will fall 9% this year, but Abbott has a healthy dividend and has raised its payout for 50 consecutive years. CFRA has a “buy” rating and $121 price target for ABT stock.
PepsiCo Inc. (PEP)
PepsiCo is a global beverage and snack company. Nelson says PepsiCo is a defensive, blue-chip investment that has stable earnings and a pristine balance sheet. In addition, he says PepsiCo’s valuable brands — including Frito-Lay, Gatorade and Mountain Dew — provide the company with pricing leverage in an inflationary environment. Nelson projects PepsiCo’s gross margins will expand by 70 basis points in 2023, a testament to the company’s ability to pass on rising costs to customers. PepsiCo has raised its payout for 49 consecutive years. CFRA has a “strong buy” rating and $200 price target for PEP stock.
S&P Global Inc. (SPGI)
S&P Global provides credit ratings, benchmarks, research and analytics for investors and other market participants. Analyst Alexander Yokum says S&P’s ratings division should recover from 2022 lows in 2023 and 2024 as the economy stabilizes and interest rates normalize. In addition, Yokum says investors don’t seem to fully appreciate the value of the diversification, the recurring revenue and the $600 million in cost synergies stemming from the acquisition of IHS Markit. S&P Global has raised its payout for 49 consecutive years. CFRA has a “buy” rating and $425 price target for SPGI stock.
Walmart Inc. (WMT)
With a chain of more than 10,500 stores, Walmart is the world’s largest discount retailer. Analyst Arun Sundaram says Walmart is moving past its inventory and supply chain challenges, and fiscal 2024 is setting up to be a significant margin expansion opportunity. Sundaram is bullish on Walmart’s “flywheel” businesses, including subscription and fulfillment services, advertising and health care. He says Walmart’s growing Walmart+ subscriber base and its expanding online marketplace leave it well positioned for the future. Walmart has raised its payouts for 49 consecutive years. CFRA has a “buy” rating and $163 price target for WMT stock.
VF Corp. (VFC)
VF Corp. is an apparel wholesaler and owner of popular brands including The North Face, Vans and Timberland. It is also at risk of losing its dividend aristocrat status in 2023 after 49 consecutive years of dividend hikes. In February, VF cut its quarterly dividend by 41%. VF had previously cut its dividend by 15.7% in 2019 but then promptly raised it enough to remain an aristocrat. Analyst Zachary Warring says the company’s Supreme buyout will help drive long-term revenue growth. CFRA has a “buy” rating and $44 price target for VFC.
McDonald’s Corp. (MCD)
McDonald’s is the largest fast food chain in the world and has about 37,000 restaurants in 120 different countries. Analyst Siye Desta says McDonald’s is making meaningful progress in its off-premise sales channels and is gaining market share. Desta says investments in mobile ordering, delivery and other digital initiatives will help it maintain momentum among consumers “trading down” for more affordable dining options. Desta projects 6.2% revenue growth in 2023. McDonald’s has raised its payout for 46 consecutive years. CFRA has a “buy” rating and $292 price target for MCD stock.
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9 Dividend Aristocrat Stocks to Buy Now originally appeared on usnews.com