For those investors interested in investing for an increasing dividend income stream, the Dividend Aristocrats represent the crème de la crème. Standard & Poor’s produces this premier list of blue-chip dividend growth stocks that have increased their dividends for 25 consecutive years. Given the quality and blue-chip status of this group of dividend achievers, they are typically in high demand, especially given today’s low interest rate environment. Consequently, most of them have been available at excessively high valuations which has greatly reduced their appeal and opportunity.
However, thanks to the panic over the coronavirus with the added fears surrounding the energy sector, the market has corrected in recent days. As a result, many of these premium blue-chip dividend growth stocks have come into value despite continuing strength in their fundamentals. Nevertheless, even though the recent correction has been scary, many of the Dividend Aristocrats are still too expensive to be considered good value.
On the other hand, the correction has brought us the opportunity to invest in several Dividend Aristocrats at attractive valuations relative to their fundamentals. With this FAST Graph video, I will be presenting my top 10 Dividend Aristocrat selections for your further research and due diligence. My selection criteria are both simple and straightforward. I have chosen only Dividend Aristocrats that have A rated or better credit rating from Standard & Poor’s and offer earnings yields above 6%.
Therefore, given their low valuations and long histories of growing their dividends, I would anticipate each of these as being capable of providing double-digit long-term rates of return over the next several years. This will be comprised of capital appreciation plus a growing dividend income stream. My lowest yielding selection provides a current yield of 2.09% and my highest yielding selection provides a current yield of 5.54%. The average yield from an equal investment in each of these 10 research candidates would equal 3.34%. The average dividend growth rate over the past 10 years has been 9.77%.
FAST Graphs Analyze Out Loud on $ABBV Abbvie, $AFL Aflac, $CAT Caterpillar, $CB Chubb, $EMR Emerson, $GD General Dynamics, $GWW Grainger, $MMM 3M, $PPG PPG Industries, $SWK Stanley Back & Decker