The S&P 500 has historically returned about 10% since 1928. That means if you’d invested in an S&P 500 index fund, you can expect it to double your money in a little over seven years. That's not a bad case for retirement portfolios.
Buying the right Dividend Aristocrat will work wonders if you want to replicate that 10% return and earn dividends. These stocks have 25-plus years of dividend increases, meaning you get more income over the long run. The longer your investment horizon is, the better it is for you.
So, let’s take a look at three Dividend Aristocrats that have the potential to outperform the market.
How I Came Up With The Following Stocks
To get the top three, I first went to Barchart to pull up my Aristocrats watchlist. Then, I cut the list down through the Stock Screener feature using these filters:
- YTD Percent Change: 10% and above.
- 2-Year Percent Change: 20% and above.
- 5-Year Percent Change: 60% and above. Unlike the last two filters, which screened for stocks using the typical 10% annual return, I increased the cutoff for the 5-year returns. Now, like always, past performance is not indicative of future returns. However, Dividend Aristocrats that consistently outperform the market in the short- and long-term are better candidates for long-term growth.
- Current Analyst Rating: 4.5 to 5 (Strong Buy). I want companies with the highest analyst scores.
Last, I added one more criterion that isn’t (yet) available on the Screener but can easily be checked on Barchart.com.
- High Price Estimates: More than 10%. As the name suggests, high price estimates are based on analyst evaluations of the stock’s potential high price within 12 months. Depending on the analyst, these values can be calculated using fundamental or technical analysis or a combination of the two.
After running the screen, three companies came up:
Walmart (WMT)
YTD Change: +53.05%
2-Year Change: +82.06%
5-Year Change: +100.67%
High Price Target: $98 (+21.85%)Walmart's retail juggernaut is up more than 50% YTD. It’s no surprise, given the company’s recent string of wins. Most notably, shoppers from different income ranges are starting to flock to its stores, when Walmart’s appeal had always been for budget-conscious consumers.
“We're [also] seeing higher engagement across income cohorts,” said CFO John David Rainey in the Q2 FY 2025 earnings call, “with upper-income households continuing to account for the majority of gains, even while we grow sales and share among middle- and lower-income households.”
Despite attracting high-earning shoppers, the company remains mindful of its prices, lowering them as much as possible without sacrificing quality or affecting its bottom line.
As CEO C. Douglas McMillon says, “Customers from all income levels are looking for value, and we have it.”
Meanwhile, WMT maintains its commitment to shareholders by paying an 84-cent annual dividend per share, which translates to a 1.04% yield.
S&P Global Inc (SPGI)
YTD Change: +16.82%
2-Year Change: +63.47%
5-Year Change: +103.45%
High Price Target: $610 (+18.54%)S&P Global has had one of the most impressive, consistent long-term bull runs I’ve seen. Since its IPO, SPGI stock has been up 9290.51%.
So, is it any wonder that people think of S&P Global as one of the best investments for returns and dividends?
Speaking of dividends… well, there isn’t much to say about them. SPGI has a notoriously low yield; 2024’s dividends total $3.64 a share, or a paltry 0.71% yield. However, dividends have increased by 80% over the last five years, so at least it offers growth in yield and returns.
Emerson Electric Company (EMR)
YTD Change: +12.64%
2-Year Change: +45.13%
5-Year Change: +64.78%
High Price Target: $140 (+27.70%)Emerson Electric, another top dividend stock mainstay, is a global industrial technology company that provides a wide range of engineering solutions and automation technologies. Of the three, EMR has the lowest YTD performance at 12.64%.
However, it does have the highest potential return at 27%. At the same time, EMR offers the highest yield on this list at 1.91%, based on its $2.10 annual dividend.
Final Thoughts
Yes, actively trading can be exciting, but for market veterans like me, relaxing and making my money work for me is a much more preferable option. So, take heed of these performing Dividend Aristocrats and see if they fit your investment needs. If you like what you see, add them to your portfolio, or feel free to browse my other Barchart articles for more dividend stock tips.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
