The S&P 500 Dividend Aristocrats Index includes many top-tier companies, many of which are at the pinnacle of their respective sectors. And with the companies paying ever-increasing dividends spanning a quarter of a century or more, how can income investors choose the right ones?
One of the best options is to consider what the experts say. And by experts, I mean Wall Street analysts and firms who make it their business to rate companies according to their current and future performance. So, today, let’s look at the top-rated Dividend Aristocrats you can add to your portfolio.
How I Came Up With The Following Stocks
Today’s analysis is quite simple. To get started, I pulled up Barchart’s Stock Screener and used the following three filters:
- Number of Analysts: 12 (High) or more. Market sentiment is a broad concept, and getting more data points for comparison works really well when checking if a stock is in demand. In this instance, I opted for companies that 12 or more analyst firms cover to get a true consensus estimate of their respective stock’s perceived market value.
- Current Analyst Rating: 4.5 to 5 (Strong Buy). While I could have extended the selection to include all buy-rated Dividend Aristocrats, I limited the selection to only those with 4.5 average scores and above. This ensures that the stocks I get on this analysis are the cream of the crop for Dividend Aristocrats.
- Watchlist: Aristocrats. Barchart’s Stock Screener has cross-functionality, which allows me to access its other features, like my personal watchlists and popular Opinion ratings. For today, I’m limiting the scan to my Aristocrats list.
After running the scan, I got four results:
Usually, I cut these lists down to three, but I think all four deserve coverage today. So, I arranged the list from highest to lowest average score, and now we’ll start with the top one:
S&P Global Inc (SPGI)
Mature companies like S&P Global tend to trade within a certain price range—or so most people think. The truth is even giants in their field can exhibit exceptional growth. Case in point: SPGI has grown 82.29% in the last five years and over 1,000% in the last twenty. So, if you invested in this financial analytics company in 2004, today, you’d be sitting on significant returns. And, that’s not even considering its dividends. Granted, S&P Global is not a high-dividend company, with its latest annual dividend at $3.64, which translates to a paltry 0.72% yield. However, it wouldn’t be fair to say that the yields are stagnant—dividends have grown 80% in the last five years.
Meanwhile, analysts give SGPI stock the highest consensus rating out of all Dividend Aristocrats at 4.81 and peg a mean target price of $589.22, implying this stock still has room to grow.
Walmart Inc (WMT)
With over 76% YTD growth, Walmart is one of the biggest winners in 2024, at least in the mega-cap category. The giant retailer has found footing in the higher-income demographic bracket after successfully courting them with higher-quality products and focusing on its e-commerce business.
Despite its impressive growth, analysts seem to think the bull run might be over. WMT stock has an average 4.72 score based on 36 analysts, which makes it a solid contender with a high target price of $115. The company also pays 84 cents annually, translating to a 0.9% yield.
Becton Dickinson and Company (BDX)
BD remains among the highest-rated dividend stocks today, as I’ve featured it in several of my top lists. The medical supplies and technology company has had a rocky 2024, with prices falling to around $228 in the last trading session.
However, analysts still rate BDX stock an average score of 4.71, indicating hope for a comeback next year. The company also pays a respectable annual dividend of $4.16, translating to a 1.82% yield based on BD stock's current trading price.
Coca-Cola Company (KO)
Last but not least is The Coca-Cola Company, one of the world's largest and most recognizable beverage companies. The company is a Dividend Aristocrat, Dividend King, and Dividend Zombie, an achievement that only a handful of companies can claim.
The Coca-Cola Company also pays the highest dividend yield on this list at 3.10% based on a forward $1.94 annual rate. Astute investors will also note that Coca-Cola is due to increase its dividend within the next couple of months. It’s no wonder that analysts still rate it a strong buy with a 4.50 average score despite its rocky performance this year.
Final Thoughts
While analyst scores are not the end-all, be-all of stock analysis, incorporating Wall Street’s view in your due diligence can work wonders. And remember, time in the market almost always outperforms market timing - and with a dividend reinvestment plan with a 10, 20, or more-year time horizon, it's absolutely possible to grow a small position into a seven-figure sum.
