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All Contents © 2020The Kiplinger Washington Editors
By Dan Burrows, Contributing Writer
| February 4, 2020
When it comes to dividend stocks, yield isn't everything. If you're an income investor in it for the long haul, you know that steadily rising payouts are a vital factor, too.
For one, dividend increases lift the yield on an investor's original cost basis, meaning today's 1% yield might be much more in the future. They're also indicative of a firm's ability to withstand the ups and downs of the economy, as well as the stock market.
Enter the Dividend Aristocrats.
The Dividend Aristocrats are companies in the S&P 500 Index that have improved their annual payouts every year for at least 25 consecutive years. It's a mix of household names as well as companies with less name recognition that nonetheless play an outsize role in the American economy, even if it's mostly behind the scenes. But all of them offer some size, longevity and familiarity, providing comfort amid market uncertainty.
Here are the current 64 Dividend Aristocrats – including the newest faces that were just added in January 2020. These have been among the best dividend stocks for income growth over the past few decades, and they're a great place to start if you're looking to add new dividend holdings to your long-term portfolios.
Data is as of Feb. 3 unless otherwise noted. Companies are listed by dividend yield, from lowest to highest. The index of Dividend Aristocrats is maintained by S&P Dow Jones Indices. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price. Dividend history based on company information and S&P data. Dividend-growth streaks include the current year if the company announced a dividend hike in 2020. Analysts’ ratings provided by S&P Global Market Intelligence.
Market value: $39.5 billion
Dividend yield: 0.5%
Consecutive annual dividend increases: 27
Analysts' opinion: 6 strong buy, 2 buy, 6 hold, 0 underperform, 0 sell
Roper Technologies (ROP, $379.71) – an industrial company whose businesses include medical and scientific imaging, RF technology and software, and energy systems and controls, among others – was added to the list of the best dividend stocks for income growth in 2018.
The diversified industrial company was tapped for the Dividend Aristocrats after it hiked its cash distribution for a 25th straight year at the end of 2017. Then in November 2018, ROP raised its dividend by 12% to 46.25 cents per share quarterly. The most recent hike came in November 2019, when the quarterly payout was lifted another 10.8%, to 51.25 cents per share.
A combination of acquisitions, organic growth and stronger margins have helped Roper juice its dividend without stretching its profits. With a payout ratio of just 15%, versus 40% for the S&P 500, this dividend stock should have ample room to keep the hikes coming for many years to come.
Market value: $53.1 billion
Dividend yield: 0.8%
Consecutive annual dividend increases: 41
Analysts' opinion: 11 strong buy, 3 buy, 15 hold, 0 underperform, 1 sell
Sherwin-Williams (SHW, $574.91) is one of the largest paints, coatings and home-improvement companies in the world, thanks in large part to its $11 billion acquisition of Valspar in 2017.
The company stumbled to start 2020 when it missed Wall Street's forecast for fourth-quarter adjusted earnings per share, hurt by a stronger dollar and trade-related weakness in its international segment. But longer-term, analysts expect better-than-average profit growth. Analysts polled by S&P Global Market Intelligence expect earnings to grow at an average annual rate of almost 13% for the next five years.
Income investors certainly don't need to worry about Sherwin-Williams' steady and rising dividend stream. SHW has hiked its distribution every year since 1979, including a 31% jump in mid-February 2019, and it pays out a mere 19% of its earnings as dividends.
Market value: $29.3 billion
Dividend yield: 0.9%
Consecutive annual dividend increases: 36
Analysts' opinion: 4 strong buy, 4 buy, 5 hold, 0 underperform, 2 sell
Cintas (CTAS, $282.01) is perhaps best-known for providing corporate uniforms, but the company also offers maintenance supplies, tile and carpet cleaning services and even compliance training. As such, it's seen by some investors as a bet on jobs growth.
There may be something to that. Shares have shot 255% higher over the past five years, versus a gain of just 58% for the S&P 500. The current economic expansion has been going on for a record 10.5 years. Meanwhile, weekly jobless claims stand at levels not seen in 50 years.
Regardless of how the labor market is doing, Cintas is a stalwart as a dividend payer. The company has raised its payout every year since going public in 1983. Most recently, in October, CTAS raised its annual dividend by 24% to $2.55 per share.
Market value: $40.9 billion
Consecutive annual dividend increases: 25
Analysts' opinion: 9 strong buy, 7 buy, 11 hold, 2 underperform, 1 sell
Ross Stores (ROST, $113.83) is an off-price apparel and home goods chain with more than 1,550 locations across 39 states, the District of Columbia and Guam; it also operates roughly 260 DD's Discounts stores across 19 states.
While Ross helps consumers save money, it has never been stingy with its dividend. The retailer has raised its payout for 25 consecutive years, landing it on the list of Dividend Aristocrats in January 2020. ROST's last hike came in March, when it lifted the quarterly payout by more than 13% to 25.5 cents per share.
Analysts expect the chain to post average annual earnings growth of more than 9% for the next three to five years. Add in a payout ratio of just 20%, and there's plenty of reason to feel good that ROST's dividend streak will go on and on.
Market value: $72.3 billion
Consecutive annual dividend increases: 47
Analysts' opinion: 5 strong buy, 6 buy, 5 hold, 1 underperform, 0 sell
Formerly known as McGraw Hill Financial, S&P Global (SPGI, $295.67) is the company behind S&P Global Ratings, S&P Global Market Intelligence and S&P Global Platts. Although most investors probably know it for its majority stake in S&P Dow Jones Indices – which maintains the benchmark S&P 500 index – it's also a central player in corporate and financial analytics, information and research.
S&P Global has paid a dividend each year since 1937 and is one of fewer than 25 companies in the S&P 500 that has increased its dividend annually for at least 47 years, the company notes. Most recently, in January, SPGI raised its quarterly payout by a healthy 17.5% to 67 cents a share.
Market value: $58.1 billion
Dividend yield: 1.0%
Consecutive annual dividend increases: 28
Analysts' opinion: 5 strong buy, 1 buy, 14 hold, 1 underperform, 0 sell
Ecolab (ECL, $201.53) provides water treatment and other industrial-scale maintenance services for several industries, including food, health care, and oil and gas. Practically speaking, its products help optimize everything from offshore oil production to electronics polishing to commercial laundries.
Ecolab's fortunes can wane as industrial needs fluctuate, though; for instance, when energy companies pare spending, ECL will feel the burn.
Over the long haul, however, this Dividend Aristocrat's shares have been a proven winner. The stock has delivered an annualized return, including dividends, of 17.0% over the past decade, versus 13.8% for the S&P 500. That's thanks in no small part to 28 consecutive years of dividend increases. The company's most recent hike came in December, when ECL raised its quarterly payout by 2% to 47 cents a share.
Market value: $32.8 billion
Analysts' opinion: 1 strong buy, 0 buy, 15 hold, 2 underperform, 0 sell
Brown-Forman (BF.B, $68.74) is one of the largest producers and distributors of alcohol in the world. Jack Daniel's Tennessee whiskey and Finlandia vodka are just two of its best-known brands, with the former helping drive long-term growth. Whiskey is increasingly popular with American tipplers, surveys show, and Jack Daniel's leads the pack. Tequila sales – Brown-Forman features the Herradura and El Jimador brands, among others – also are on the rise.
Unlike many of the best dividend stocks on this list, you won't have a say in corporate matters with the publicly traded BF.B shares. They hold no voting power. And most of the voting-class A shares are held by the Brown family.
Still, you can enjoy in the company's gains and dividends. That payout has been on the rise for 36 consecutive years and has been delivered without interruption for 74. Most recently, Brown-Forman upped the ante by 5% in November 2019, to 17.43 cents per share.
Market value: $75.7 billion
Dividend yield: 1.2%
Consecutive annual dividend increases: 48
Analysts' opinion: 10 strong buy, 2 buy, 6 hold, 0 underperform, 0 sell
Medical devices maker Becton Dickinson (BDX, $279.31) bulked up in 2015 with its acquisition of CareFusion, a complementary player in the same industry. Then in 2017, it struck a $24 billion deal for fellow Dividend Aristocrat C.R. Bard, another medical products company with a strong position in treatments for infectious diseases.
Becton Dickinson, which makes everything from insulin syringes to cell analysis systems, is increasingly looking for growth to be driven by markets outside the U.S., including China. Analysts expect BDX to generate average annual earnings growth of 11.2% for the next five years, according to S&P Global Market Intelligence.
BDX's last hike was a 2.6% uptick announced in November 2019. Its annual dividend growth streak is nearing five decades – a track record that should offer peace of mind to antsy income investors.
Market value: $12.4 billion
Dividend yield: 1.4%
Analysts' opinion: 0 strong buy, 0 buy, 10 hold, 3 underperform, 2 sell
Expeditors International of Washington (EXPD, $72.70) was added to the Aristocrats in January 2020 as it eclipsed a quarter-century of dividend growth. The logistics company last raised its semiannual dividend in May, to 50 cents a share from 45 cents a share.
EXPD shares have been under pressure recently, and the company gave a bearish outlook in mid-January. Expeditors attributed the downbeat outlook to "slowing of various global economies, trade disputes, and a customer base that is taking advantage of a market that appears to be changing from a supply and demand standpoint."
If past is prologue, however, EXPD will remain committed to its dividend. A payout ratio of just 26% should help ensure that it has ample resources to keep the streak alive.
Market value: $21.7 billion
Dividend yield: 1.5%
Consecutive annual dividend increases: 34
Analysts' opinion: 1 strong buy, 0 buy, 6 hold, 2 underperform, 4 sell
McCormick (MKC, $163.16) – the maker of herbs, spices and other flavorings – has been bulking up over the past three years to drive sales growth, and the deals are paying off. MKC forecasts 2020 sales growth of 2% to 4%, which isn't bad for a mature company in its sector.
Analysts expect average annual earnings growth of more than 6% for the next five years. That should provide support for McCormick's dividend, which has been paid for 95 consecutive years and raised annually for 34. Most recently, in November, the company hiked the dividend by nearly 9% to 62 cents per share.
"We remain committed to our long history of returning cash to shareholders and I am incredibly proud to announce another dividend increase," CEO Lawrence Kurzius said in a press release.
That 62-cent dividend, by the way, is double the amount it paid in 2012.
Market value: $154.0 billion
Dividend yield: 1.7%
Analysts' opinion: 10 strong buy, 5 buy, 4 hold, 1 underperform, 0 sell
Following its 2013 spinoff of AbbVie – another Dividend Aristocrat on this list that we'll discuss later – Abbott Laboratories (ABT, $87.06) focused on branded generic drugs, medical devices, nutrition and diagnostic products. Its product list includes the likes of Similac infant formulas, Glucerna diabetes management products and i-Stat diagnostics devices.
The company has been expanding by acquisition as of late, including medical-device firm St. Jude Medical and rapid-testing technology business Alere, both snapped up in 2017.
Abbott Labs, which dates back to 1888, first paid a dividend in 1924. Its dividend growth streak is long-lived too, at 48 years and counting. Its last payout hike came in December – a 12.5% improvement to 36 cents per share.
Market value: $28.7 billion
Analysts' opinion: 9 strong buy, 3 buy, 12 hold, 1 underperform, 1 sell
PPG Industries (PPG, $121.34) makes coatings and paints for numerous industries, including aerospace, architecture, automotive and packaging. It's a business that always has some level of need, but the company says 2020 could be a bit of a down because of global trade tensions and weaker demand from Boeing (BA), a major customer.
Longer-term, however, analysts remain optimistic that the company can generate steady growth.
PPG's profits are forecast to grow at an average annual rate of 6.4% for the next three to five years, according to S&P Global Market Intelligence. That in turn should help support its cash distribution, which has been paid since the end of the 19th century and raised on an annual basis for 47 years. The dividend stock last improved its payout in July 2019, when it announced a 6.3% increase to 51 cents per share.
Market value: $16.5 billion
Consecutive annual dividend increases: 64
Analysts' opinion: 5 strong buy, 1 buy, 10 hold, 1 underperform, 0 sell
Dividend growth has been a priority for Dover (DOV, $113.68), which at 64 consecutive years of annual distribution hikes boasts the longest such streak among this list of top dividend stocks. Dover last raised its payout in August 2019, when it upped the quarterly dole by 2% to 49 cents a share.
The industrial conglomerate has its hands in all sorts of businesses, from Dover-branded pumps, lifts and even productivity tools for the energy business, to Anthony-branded commercial refrigerator and freezer doors.
It's not an exciting business, but it can be a remunerative one.
"Dover is focused on expanding productivity initiatives while its mergers and acquisitions pipeline remain robust," Zacks Equity Research analysts say. "It continues to create value through sustainable growth, profitability improvement, strong cash flow, smart organic and inorganic capital deployment."
Market value: $112.5 billion
Consecutive annual dividend increases: 26
Analysts' opinion: 10 strong buy, 3 buy, 6 hold, 2 underperform, 1 sell
Linde (LIN, $209.44) became a Dividend Aristocrat in late 2018 after it completed its merger with Praxair, which itself was added to the illustrious list of the S&P 500's best dividend stocks for income growth in January 2018. The $90 billion tie-up of Linde and Praxair created the world's largest industrial gasses company.
Praxair raised its dividend for 25 consecutive years before its merger, and the combined company is expected to continue to be a steady dividend payer. Prior to the merger, Linde, now headquartered in Dublin, raised its dividend every year since 2014. Its most recent hike was in late February 2019 – a 6% bump to 87.5 cents per share.
Analysts project the multinational industrial firm's profits to increase at an average annual rate of almost 11% over the next three to five years, according to a survey by S&P Global Market Intelligence. A payout ratio of just 31% also gives Linde plenty of breathing room for future dividend growth.
Market value: $24.5 billion
Consecutive annual dividend increases: 52
Analysts' opinion: 8 strong buy, 4 buy, 9 hold, 0 underperform, 0 sell
Power- and hand-toolmaker Stanley Black & Decker (SWK, $160.87) has paid a dividend for 143 years on an uninterrupted basis, and it has improved that cash distribution annually for more than half a century, including a 4.5% increase to 69 cents per share in July 2019.
But Stanley isn't just some sleepy income stock. Analysts expect SWK to generate average annual earnings growth of nearly 9% a year over the next half-decade, thanks to a strategy of growth through acquisitions and cost cuts.
Stanley Black & Decker bought Newell Tools – which includes the Lenox and Irwin brands – from Newell Brands (NWL) for $2 billion in 2016. In January 2017, it negotiated the purchase of the Craftsman tool brand from Sears Holdings (SHLDQ) for a total of $775 million over three years and a percentage of annual sales. Then in 2018, SWK announced the acquisition of IES Attachments for $690 million cash, and the $440 million purchase of Nelson Fastener Systems.
Stanley still is making deals in 2020, announcing in January that it would buy Boeing-supplier Consolidated Aerospace Manufacturing for up to $1.5 billion.
Market value: $7.3 billion
Dividend yield: 1.8%
Consecutive annual dividend increases: 44
Analysts' opinion: 4 strong buy, 2 buy, 11 hold, 2 underperform, 0 sell
U.K.-based diversified industrial company Pentair (PNR, $43.36) completed the tax-free spinoff of nVent Electric (NVT
) in 2017, allowing the company to focus on its water assets, operating in businesses such as Flow Technologies, Filtration & Process and Aquatic & Environmental Systems. It bulked up those operations with its January 2019 acquisition of Aquion for $160 million in cash.
Pentair has raised its dividend annually for 44 straight years, most recently by 5.6% to 19 cents a quarter. Analysts on average project long-term earnings growth of 6.6% a year, according to S&P Global Market Intelligence. That, as well as a modest payout ratio of 34%, bode well for future dividend growth.
Market value: $8.6 billion
Analysts' opinion: 7 strong buy, 3 buy, 9 hold, 2 underperform, 2 sell
Albemarle (ALB, $80.79) which manufacturers specialty chemicals such as lithium, was tapped to join the Dividend Aristocrats in January, having secured a streak of 25 years of dividend increases in 2019.
Albemarle's products work entirely behind the scenes, but its chemicals go to work in a number of industries, from clean-fuel technologies to pharmaceuticals to fire safety.
The chemicals giant last hiked its dividend in late February 2019, by 10% to 36.75 cents a share. Investors expect another hike this year. After all, with a payout of less than 30%, ALB certainly has the financial resources.
"Providing our shareholders with a dividend increase every year for the past quarter of a century places Albemarle among a select group of companies," CEO Luke Kissam said in a statement. "We are confident in the future of Albemarle and remain dedicated to generating shareholder return through our dividend and business growth."
Market value: $324.2 billion
Dividend yield: 1.9%
Consecutive annual dividend increases: 45
Analysts' opinion: 13 strong buy, 7 buy, 13 hold, 1 underperform, 0 sell
The world's largest retailer might not pay the biggest dividend, but it sure is consistent. Walmart (WMT, $114.27) has been delivering meager penny increases to its dividend since 2014, including 2019's bump to 53 cents per share. But that has been enough to maintain its 45-year streak of consecutive annual payout hikes.
Walmart boasts nearly 5,400 stores across different formats in the U.S., not to mention another 5,800 stores across dozens more banners in 26 other countries.
But while Walmart is a brick-and-mortar business, it's not conceding the e-commerce race to Amazon.com (AMZN
). For its third-quarter, WMT reported a 41% increase in U.S. e-commerce sales, driven by its online grocery business. Market research firm eMarketer notes that Walmart eclipsed Apple (AAPL
) as the third-largest online retailer at the end of 2018. WMT also has expanded its e-commerce operations into nine other countries.
Market value: $158.2 billion
Consecutive annual dividend increases: 42
Analysts' opinion: 14 strong buy, 5 buy, 7 hold, 0 underperform, 0 sell
Medtronic (MDT, $117.99), one of the world's largest makers of medical devices, is an income machine. Most recently, in June, MDT lifted its quarterly payout by 8% to 54 cents a share. Its dividend per share has grown by 77% over the past half-decade and has grown at a 17% compounded annual growth rate over the past 42 years, Medtronic says.
MDT aims to return a minimum of 50 % of its free cash flow to shareholders through dividends and share repurchases. The company can steer all this cash back to shareholders thanks to the ubiquity of its products.
Medtronic also spends heavily in research and development, including $2.3 billion in 2019. As a result, it holds more than 47,000 patents on products ranging from insulin pumps for diabetics to stents used by cardiac surgeons. Look around a hospital or doctor's office – in the U.S. or in more than 160 other countries – and there's a good chance you'll see its products.
Market value: $89.8 billion
Consecutive annual dividend increases: 57
Analysts' opinion: 16 strong buy, 7 buy, 9 hold, 1 underperform, 0 sell
When it comes to home improvement chains, Home Depot (HD), a member of the Dow Jones Industrial Average, gets all the glory. But rival Lowe's (LOW, $117.18) is the superior dividend grower.
Lowe's has paid a cash distribution every quarter since going public in 1961, and that dividend has increased annually for more than half a century. Most recently, in May 2019, Lowe's announced that it would lift its quarterly payout by 14.5% to 55 cents a share. Home Depot is a longtime dividend payer, too, but its string of annual dividend increases dates back only to 2010.
Analysts expect Lowe's to deliver average annual earnings growth of more than 15% for the next five years, according to S&P Global Market Intelligence, which should help keep the dividend aloft.
Market value: $16.3 billion
Analysts' opinion: 3 strong buy, 0 buy, 16 hold, 1 underperform, 1 sell
W.W. Grainger (GWW, $303.23) – which not only sells industrial equipment and tools, but provides other services such as helping companies manage inventory – is expected to generate steady-if-not spectacular sales growth for the next few years. Analysts forecast the company to have a long-term earnings growth rate of 9.8%
Fortunately for the income-minded, Grainger has achieved annual dividend growth for nearly half a century and maintains a comfortable 31% payout ratio. It renewed its Dividend Aristocrats membership card in April 2019, when it announced a 6% dividend increase to $1.44 per share.
Market value: $129.4 billion
Dividend yield: 2.0%
Analysts' opinion: 10 strong buy, 4 buy, 5 hold, 0 underperform, 1 sell
United Technologies (UTX, $149.95) was added the Dividend Aristocrats in January 2019. The industrial conglomerate – whose businesses include Collins Aerospace, Pratt & Whitney aircraft engines, Otis elevators and Carrier cooling systems – has raised its dividend annually for 26 consecutive years.
But this year will be a transitional one for UTX, which expects to eventually break into three separate, independent companies: United Technologies, which will consist of Collins and Pratt & Whitney; Otis; and Carrier.
Also, note that UTX's quarterly dividend amount was stagnant in 2019. That's because it's splitting. UTX has pledged that the dividends from the three firms will add up to at least 73.5 cents a share.
The Dow Jones stock has paid cash dividends on its common stock every year since 1936.
Market value: $14.5 billion
Analysts' opinion: 3 strong buy, 3 buy, 4 hold, 2 underperform, 0 sell
Atmos Energy (ATO, $118.67), which distributes and stores natural gas, was added to the Dividend Aristocrats in January 2020. The Dallas-headquartered firm serves more than 3 million customers across eight states, with a large presence in Texas and Louisiana.
Atmos clinched its 25th year of dividend growth in November 2019, when it announced a 9.5% increase to 57.5 cents per quarter.
"The company has a sturdy capital expenditure policy in place, helping it enhance the safety and reliability profile of its natural gas pipeline," notes Zacks Equity Research. Analysts surveyed by S&P Global Market Intelligence forecast average annual earnings growth of 6.2% over the next three to five years. But for dividend stocks in the utility sector, that's just fine.
Market value: $69.4 billion
Analysts' opinion: 4 strong buy, 5 buy, 9 hold, 2 underperform, 2 sell
Chubb (CB, $153.23) was added to the Dividend Aristocrats in January 2019. The insurance company last raised its payout in May, by 2.7% to 75 cents a share. With that move, Chubb notched its 26th consecutive year of dividend growth.
As the world's largest publicly traded property and casualty insurance company, Chubb boasts operations in 54 countries and territories. It's not the most exciting topic for dinner conversation, but it's a profitable business that supports a longstanding dividend.
The company's payout ratio stands at just 37% of earnings, so income investors can expect Chubb to remain among the Dividend Aristocrats for years to come.
Market value: $25.4 billion
Consecutive annual dividend increases: 54
Analysts' opinion: 0 strong buy, 1 buy, 8 hold, 3 underperform, 1 sell
Hormel Foods (HRL, $47.43) is about as reliable as they come when it comes to income investing. The packaged food company best known for Spam – but also responsible for its namesake-branded meats and chili, Skippy peanut butter, Dinty Moore stews and House of Tsang sauces – has raised its annual payout every year for more than five decades.
Indeed, in November, Hormel announced its 54th consecutive annual dividend increase – a nearly 11% raise to 23.25 cents a share. The payment, to be made Feb. 18 to shareholders of record as of Jan. 13, will be the 366th consecutive quarterly dividend paid by the company.
Hormel is rightly proud to note that it has paid a regular quarterly dividend without interruption since becoming a public company in 1928. Meeting analyst expectations – which currently are for about 4.1% average annual profit growth for the next five years – would go a long way toward keeping that streak alive.
Market value: $38.2 billion
Dividend yield: 2.1%
Consecutive annual dividend increases: 37
Analysts' opinion: 1 strong buy, 2 buy, 8 hold, 1 underperform, 2 sell
Aflac (AFL, $52.01) is a supplemental insurance company – popularized by the loud Aflac duck – with roots going back to 1955 that covers numerous workplace offerings, such as accident, short-term disability and life insurance.
A year ago, Aflac lifted its dividend for a 37th consecutive year, this time by 3.8% to 27 cents per share. It also pledged to buy back $1.3 billion to $1.7 billion of its own stock in 2019. Investors expect AFL to raise its dividend for a 38th consecutive year as part of its fourth-quarter earnings report, slated for release after the Feb. 4 closing bell.
Analysts expect Aflac to generate average earnings growth of 3.4% a year for the next five years, according to S&P Global Market Intelligence. A thin 26% payout ratio bolsters the future dividend growth case, too.
Market value: $75.1 billion
Analysts' opinion: 4 strong buy, 2 buy, 13 hold, 1 underperform, 0 sell
Automatic Data Processing (ADP, $173.94) is the world's largest payroll processing firm, responsible for paying nearly 40 million employees and serving more than 810,000 clients across 140 countries.
One of ADP's great advantages is its "stickiness." It's difficult and expensive for corporate customers to change payroll service providers. That competitive advantage helps throw off consistent income and cash flow. In turn, ADP has become a dependable dividend payer – one that has provided an annual raise for shareholders since 1975.
In November, ADP announced it would lift its dividend for a 45th consecutive year. The new payout of 91 cents per share is more than 15% fatter than the previous amount.
Market value: $17.4 billion
Consecutive annual dividend increases: 59
Analysts' opinion: 1 strong buy, 1 buy, 5 hold, 1 underperform, 1 sell
Cincinnati Financial (CINF, $106.31) boasts one of the Dividend Aristocrats' longest streaks of consecutive annual dividend increases. Indeed, on Jan. 31, the property and casualty insurer lifted its payout for a 60th straight year. The company improved its quarterly dividend by 5.7%, to 56 cents per share.
Income investors can expect more where that came from. Over the 12 months ended Sept. 30, CINF generated free cash flow of $633 million while spending $350 million on dividends. It has breathing room.
It might need some of that room, too, given lean earnings estimates. Cincinnati Financial, whose offerings include life insurance, annuities, umbrella insurance and a wide range of business insurance products, is expected to average just 1.9% annual profit growth over the next five years, according to S&P Global Market Intelligence data.
Market value: $39.1 billion
Dividend yield: 2.2%
Consecutive annual dividend increases: 51
Analysts' opinion: 2 strong buy, 3 buy, 9 hold, 1 underperform, 1 sell
Sysco (SYY, $76.68), a food services and restaurant supply company, is generating sales growth by making acquisitions.
In January 2019, SYY bought Waugh Foods – an Illinois broadline distributor with approximately $40 million in annual sales. The company also picked up Upsys, J. Kings Food Service Professionals, and J&M Wholesale Meats last year. Other notable moves include SYY's 2016 deal for European services and supplies company Brakes Group, as well as the Supplies on the Fly e-commerce platform that same year. In February 2018, it picked up Doerle Food Services, a Louisiana broadline distributor with approximately $250 million in annual foodservice distribution sales.
However, Sysco has been able to generate plenty of growth on its own, too. The combination of organic and M&A-based growth has produced a steady ramp-up in revenues for years. Analysts, meanwhile, expect average earnings growth of 11.3% annually over the next half-decade.
That should allow Sysco to maintain its spot among the best dividend stocks for payout growth. SYY's streak currently sits at half a century and includes a 15% hike to 45 cents per share, announced in November 2019.
Market value: $53.6 billion
Dividend yield: 2.3%
Consecutive annual dividend increases: 38
Analysts' opinion: 7 strong buy, 6 buy, 12 hold, 0 underperform, 0 sell
Air Products & Chemicals (APD, $243.01) spent much of the past few years restructuring. Under pressure from investors, it started to shed some weight, including spinning off its Electronic Materials division and selling its Performance Materials business.
Air Products, which dates back to 1940, now is a slimmer company that has returned to focusing on its legacy industrial gases business. But it hasn't taken its eye off the dividend, which it has improved on an annual basis for 38 years in a row. That includes a 15.5% upgrade to be paid in May – the largest increase in company history.
"The board's decision to increase the dividend by over 15% reflects continued confidence in Air Products' strong financial position and cash flows," the company said in a news release. "In fiscal 2019, we paid nearly $1 billion dollars of dividends to our shareholders."
Market value: $6.9 billion
Analysts' opinion: 3 strong buy, 0 buy, 8 hold, 1 underperform, 0 sell
A.O. Smith (AOS, $42.28), a manufacturer of commercial and residential water heaters, is a relatively recent addition to the Dividend Aristocrats, entering the club in 2018. In October 2019, it announced a 9% raise in its quarterly payout to 24 cents a share. AOS noted at the time that its five-year compound annual dividend growth rate was 24%.
Analysts expect the company's earnings to rise at a rate of 8% a year for the next five years, helped by the rollout of A.O. Smith water heaters at home-improvement chain Lowe's, as well as strength across the North American market.
A.O. Smith has increased its dividend annually for 27 consecutive years.
Market value: $31.4 billion
Consecutive annual dividend increases: 33
Analysts' opinion: 6 strong buy, 1 buy, 9 hold, 2 underperform, 0 sell
Asset managers such as T. Rowe Price (TROW, $134.52) have been losing market share to indexed funds of the type Vanguard offers, but the company still boasts $1.2 trillion in assets under management, and analysts expect solid top-line growth in the current fiscal year. Aided by advising fees, the company is forecast to post a 10% gain in sales this year, according to data from S&P Global Market Intelligence.
T. Rowe Price has improved its dividend every year for 33 years, and it boasts a lean 33.9% payout ratio that should keep the annual hikes coming. The company last raised its distribution on Feb. 13, 2019, by 8.6% to 76 cents per share; another hike should be coming soon if T. Rowe sticks to its typical dividend schedule.
Market value: $33.1 billion
Analysts' opinion: 10 strong buy, 6 buy, 9 hold, 1 underperform, 0 sell
VF Corp. (VFC, $82.91) is an apparel company with a large number of brands under its umbrella, including The North Face outdoor products, Timberland boots and Eastpak backpacks. It added to its brand portfolio with the acquisition of Icebreaker Holdings – another outdoor and sport designer – under undisclosed terms in April 2018.
Analysts expect average annual earnings growth of 13.4% for the next five years from this transforming company. In addition to picking up Icebreaker, the company also spun off Kontoor Brands (KTB
), which includes Lee and Wrangler jeans, in 2019.
The company's dividend technically fell last year, from 51 cents per share to 43 cents, before growing back to 48 cents per share – put the dip was an adjustment to account for the Kontoor spinoff. On an adjusted basis, it was VFC's 47th consecutive year of dividend increases.
KTB, which was spun off to shareholders in May, has a quarterly dividend of 56 cents a share that yields 5.7% at current prices.
Market value: $64.2 billion
Analysts' opinion: 5 strong buy, 2 buy, 13 hold, 1 underperform, 1 sell
Colgate-Palmolive (CL, $74.93) sells a wide range of consumers staples brands including its namesake toothpaste and dish soap, as well as Speed Stick deodorant, Murphy cleaning products and Tom's of Maine personal-care products. Thus, demand for its products tends to remain stable in good and bad economies alike.
The company derives the vast majority of its sales outside the U.S., and that has been a problem of late. A stronger dollar, stagnant demand in key overseas markets and higher input costs made for an underwhelming 2019.
But Colgate's dividend – which dates back more than a century, to 1895, and has increased annually for 57 years – should survive. CL last raised its quarterly payment in March 2019, when it added 2.4% to 43 cents a share. Its dividend longevity might make Colgate worth a look once the global picture improves and revenue picks up.